Wealth managers could benefit from targeting the children of the ultra-rich to build brand loyalty, a new white paper has found.
The seven-page report The Super Rich Drive Competition Among Private Bankers and Wealth Management Firms by WealthInsight,the super rich drive competition among private bankers and wealth management firms said that since the 2008 financial crisis wealth managers and private banks have changed their model to focus on ultra-high net-worth individuals.
This is because they offered large-scale profitability because of the size of their investments.
Several private banking firms, such as Barclays Wealth Management, RBC Wealth Management and Kotak Mahindra Private Banking, have already been providing services to the children of the super rich.
Smaller advisory firms could enter into this niche, the report suggested, especially as in the UK the ultra-high net-worth population is expected to grow by 3 per cent from 10,454 in 2014.
Roselyn Lekdee, an analyst at WealthInsight, said: “It is important to build a strong relationship with the children of ultra-high net-worth individuals at an early stage, as this can help create brand loyalty.
“Once children of ultra-high net-worth individuals become confident and comfortable in using wealth management services with certain private banks or wealth management firms they are unlikely to switch – it is better to stay with someone you trust.”
The report attributed the global growth in the super wealthy to the expansion of the ultra-high net-worth population in India and China.
Based on WealthInsight’s study, ultra-high net-worth individuals often inherit their fortunes through family businesses or create their own wealth through entrepreneurship.
Dr Lekdee said: “It is becoming increasingly important for wealth managers and private bankers to build trust and brand loyalty with ultra-high net-worth clients, and also to understand their complex needs.
“It might be surprising but, to target the ultra-high net-worth successfully, wealth managers and private bankers might have to act like the best generalist not just an investment adviser.”
Adviser view
Robert Lockie, of London-based Bloomsbury True Wealth, said: “Our experience is generally that what they are looking for is a relationship, someone who will still be there in five years’ time and who will will enable them to get on with their life and deal with the stuff that’s boring.
“I don’t think anyone comes to us wanting investment performance because if that’s what you are offering you will live or die by it and if someone else is offering a better performance they will walk. It seems to me quite risky.”
