Private banks think out of the box to woo super-wealthy customers
Attracting the business of wealthy clients, worth an estimated $42 trillion globally, is critical for banks seeking not only to maintain their profitability, but also to diversify their sources of funding and reduce their reliance on capital markets.india Updated: Sep 18, 2012 22:37 IST
What do you get the client who has everything? An evening at a sleep school to get tips on how to beat insomnia? A chance to play cricket with former England star Andrew Flintoff? Advice on finding the right school?
These are just some of the services offered by Barclays in its 'Little Book of Wonders', underscoring the lengths to which the bank is prepared to go to win the custom of the super-wealthy at a time when its traditional businesses are struggling with weak economies and tougher regulators.
"There is more to wealth than managing one's assets," said David Hughes, Head of Affinity Partnerships at Barclays, which oversees the Little Book of Wonders.
Attracting the business of wealthy clients, worth an estimated $42 trillion globally, is critical for banks seeking not only to maintain their profitability, but also to diversify their sources of funding and reduce their reliance on capital markets.
Private clients pay on average 1% of assets under management in fees to their wealth managers each year.
Coutts, the 300-year old British bank which counts Britain's Queen Elizabeth among its clientele, is beefing up its non-financial services to hold onto elite customers.
Ian Ewart, head of product, services & marketing, said the bank still loved to whisk away clients on horseracing jaunts and to a welter of events.
But as entrepreneur clients start to outnumber heirs and heiresses, who tend to have a different outlook.
Coutts is spending more time, effort and money satisfying a thirst for intellectual "entertainment" and high-level networking in a business world where success increasingly depends as much on "who you know" as "what you know".
Banks will pitch services such as Futurescope of Coutts or the Little Book of Wonders to a select set of clients depending on their wealth and how they've made their money rather than offering blanket invites, to preserve the exclusivity of the offers.
The global wealth management industry is now paying $8 to generate every $10 of income, calculates Scorpio Partnership.
In an attempt to offset the costs of providing the service, the Barclays has offered the luxury brands the opportunity to advertise, for a fee, on its Little Book of Wonders portal.
Such services are often tailored to the ultra high net worth individuals, with assets greater than $25 million, who are not only costing the banks more but are also not necessarily the most profitable.
So-called 'Core Millionaires', with assets of between $1 million and $10 million, generate investment revenue margins on average 2-3 times higher than their wealthier counterparts, making greater use of more profitable banking and lending products, a survey by McKinsey estimates.
These Core Millionaires are also projected to generate 60 percent of asset growth amongst all households with more than $1 million in assets by 2015.