PricewaterhouseCoopers Wealth Management Survey

Published: 01-APR-04

Intense competition is the most important issue driving strategies and shaping revenue growth among global wealth managers and private banks. This is the main theme highlighted in the first of a series of publications that will investigate the key findings of the PricewaterhouseCoopers Global Private Banking/Wealth Management Survey launched in July 2003. ,p Johannes Grosskopf, a partner in the PricewaterhouseCoopers' Johannesburg office, one of the authors of the report, says this edition focuses on clients and the competition that there will be in order to win and retain clients.

Some 49 per cent of wealth managers expect to increase the number of ultra-high-net worth clients in the next three years. Competition will therefore be toughest at the top of the triangle. Investment performance was volatile during the past two years, says the report, and many of the world's wealthy saw significant falls in the value of their portfolios.

Private banks in North America and Europe lost clients because of poor investment performance - but clients still ranked overall financial goals and investment objectives as more important than investment performance. The world's wealthy are measuring private wealth managers against benchmarks and are likely to change providers because of service that does not meet their needs. Lack of proactive advice and high charges are the other two reasons clients desert their banks.

The survey defines four types of client sought by the private banks:

  • "Ultra high net worth individuals" who have a net worth of $50-million or more; they make up the top two per cent.
  • "Very high net worth individuals" with net worth of $5 million to $50-million ; they accounting for 15 per cent
  • "High net worth individuals" in the $500,000 to $5 million bracket and account for 39 per cent
  • Those with net assets of $100, 000 to $500 000 are merely "affluent" and make up 44 per cent of the clients under management.
The survey found that Wealth managers have begun to take on board that it is not profit centre profit that is critical� but rather profitability at the client, relationship and product level."

Few wealth managers know their clients and their needs well. Developing a deeper understanding of client needs and building a holistic approach to handling clients will be the key to competitiveness.

Segmentation is becoming ever more important and only those private banks which can match products and clients efficiently will be long-term winners.

Wealth managers need to restructure their client service operations to create the personalised service that will attract and retain the wealthiest clients.

The key to success will be expert and motivated relationship managers, who will be technically trained on products and services, as well as marketing and selling skills. However, "softer skills" required to closely manage client relationships are relatively neglected.

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