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Wealth Management 2005 from
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Additional firepower
" By Kevin Golder
HR Solutions
Recent articles in the financial press have confirmed that the number of high net worth individuals is increasing and if £200k in liquid assets is used as a benchmark then the growth for the last calendar year was approximately 12% in the UK alone, equating to some 900,000 UK wealthy individuals, with 1.3 million predicted by 2009.
Nicola Horlick recently pointed out that although traditional wealth management firms tend to focus on men, women control a rapidly increasing proportion of the UK's private wealth. Furthermore, that there are now more women than men millionaires aged between 18 and 44 in the UK. By 2025 women are expected to own 60 per cent of the UK's personal wealth.
Wealth management is a global business with offshore private banks having a presence in established jurisdictions as well as developing a presence in some of the world’s fastest growing economies. They routinely discuss investment strategy with a client in another jurisdiction and another culture, where English is a second language. Building a prestigious brand is therefore no longer sufficient; this is a demanding client base requiring not just the financial returns but undoubted service quality, flexibility, discretion, cultural sensitivity and quite often some comfort that funds invested meet the requirements of an ethical strategy.
These ethical considerations are no longer about cigarettes and low wages and are more about positive investment. One of the major differences is that private fund investment managers are key investors in companies and consolidation in their industry has made their corporate voting power even greater.
Recent announcements have highlighted the need to differentiate service by offering niche products. Bramdean Asset Management, the London-based multi-manager, launched earlier this year primarily designed for independent wealthy women, a sector overlooked by many firms active in the market.
Women apparently have a different style of problem solving and analysis and often a different attitude towards money and financial security. Investors are offered unprecedented access to a level of service and investment talent that is generally reserved for the institutional market.
The trust business has recently seen increased activity in matrimonial work, particularly protecting family wealth from divorce claims.
The likely introduction of trust legislation in Middle East jurisdictions has prompted trust companies to review what is ‘compliant’ with Islamic Shariah law.
Assuming clients will continue to be attracted by great brands is no longer the route to success. An increasing number of them are searching for a more personalised approach and, in doing so, are becoming more prepared to move from one adviser to the other.
Anecdotally it would appear that while the levels of customer defection are unlikely to match the current situation in the general retail banking market, successful customer retention will become an increasingly pressing issue for the private banking industry.
Being in business is about retained fee-paying clients, profits and market share; turnover on its own is pure vanity. The financial services industry has a number of institutions that are used to keeping there ‘friends’ close……with an inquisitive approach to business development that ensures they will never be completely outgunned. M&A activity is a natural consequence of this desire to consolidate in London and elsewhere that has highlighted the determination to acquire additional firepower at a corporate level. What is also gathering apace is the number of key HNW professionals and lawyers that are then hired to take that additional firepower to a client base which, combined with the skills, experience and niche products, is further evidence that the industry is positioning itself for an energetic and, we anticipate, highly profitable 2006.
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