Friday 29 Mar 2024
By
main news image

Private banks and wealth management firms have changed their business model from focusing on the size of their business to targeting specific client segments that yield the largest profits.

According to WealthInsight Analysts, ultra high net worth individuals (UHNWI) offer wealth managers large-scale profitability due to the potential size of their investments. They represent 1% of the global high net worth individual (HNWI) population, but account for about 33% of global HNWI wealth.

Based on WealthInsight’s study, UHNWIs often inherit their fortunes from their families through family businesses, or frequently create their own wealth through entrepreneurship.

While UHNWIs in developed economies such as the UK and the US are generally older and often inherit their wealth through the family business, those in emerging economies are often young business owners who have made their own fortunes.

WealthInsight analyst Dr Roselyn Lekdee said in a statement, “The majority of the super rich made their fortunes the hard way, thus it is more necessary for them to require more sophisticated wealth management services than the core millionaires.

“It is therefore becoming increasingly important for wealth managers and private bankers to build trust and brand loyalty with UHNWI clients, and also to understand their complex needs … to target the UHNWIs successfully, wealth managers and private bankers might have to act like the best generalist, and not just an investment adviser.

“This means they must be able to assist the UHNWIs in every possible way required, ranging from concierge services to providing investment advice. To put it simply, investment knowledge alone is not enough.”

WealthInsight also reported that private banks such as Citi and Coutts have focused on UHNWI clients who are more likely to be loyal, and therefore bring in more profit.

The global head of a top private bank in Singapore reportedly told WealthInsight that one of the main strategies he is focusing on now is to serve a smaller subset of clients (or UHNWIs), and make sure the bank is taking care of their financial needs in the right way, instead of serving a large client base.

      Print
      Text Size
      Share