"With fewer liquidity events, these are tough times," said Bill Sappington, discussing the challenge in finding new wealthy clients for his private banking group at BNY Mellon Wealth Management. To get and keep those clients, he suggested, you need to offer clients transparency and convenience, and build trust between the client and the wealth advisor.
Sappington's dilemma is exacerbated by the fact that every bank, broker-dealer, independent advisor, and online brokerage firm wants the same client: the high-net-worth (HNW) individual with investable assets of, say $1 million. But who is actually gaining that client, and how are they doing it?
HNWs Need 'A Champion'
In a session at the Pershing 2010 Customer Conference at the Gaylord National hotel in National Harbor, Md., on Oct. 15, three bank executives addressed wealth management in the bank channel, presenting their own banks' approaches to finding success with the HNW.
Bill Curtis, COO of M&I Financial Advisors, the wealth management arm of Milwaukee-based M&I Bank, said that to succeed in the bank channel, you need "a champion to break down the traditional silos, allowing for cross-pollination" across the bank.
Chris Randall, president and CEO of M&T Securities, a division of Buffalo-based M&T bank, warned that while you "can succeed with a silo approach, it won't be for long," arguing for
an integrated approach, such as at M&T, where the brokerage and wealth advisor arms were combined, and where the client decides who her primary relationship manager will be.
Wealth Management and the Banks
So far this year, 129 FDIC-insured banks have failed in the United States. Internationally, wealth, as measured by the annual Merrill Lynch CapGemini World Wealth Report, rebounded in 2009, so that by the time of the survey at year-end 2009, the number of high-net-worth individuals—people with more than $1 million in investable assets, not counting their residences, collectables, and consumer durables—rose 17.1% to 10 million, returning to the levels last seen in 2007. Total wealth held by those 10 million individuals rose 18.9% to $39 trillion.
Europe and the Asia-Pacific regions now can count roughly the same number of HNW individuals, but the total amount of wealth in Asia has now eclipsed Europe's, with North America still in the lead in terms of total wealth. The U.S., Japan, and Germany still accounted for 53.5% of the world's HNW population at the end of 2009, according to the World Wealth Report, with the number of wealthy North Americans rising 16.6% in 2009 to 3.1 million, with the wealth held by those HNW individuals rising 17.8% to $10.7 trillion.
The CapGemini report says the number of ultra-high-net-worth individuals—with more than $5 million in investable assets—rose 21.5% in 2009 after losing 24.0% in 2008.
Have the banks done a good job at attracting those wealthy individuals? Research by London-based Scorpio Partnership released this summer hints at the challenges but also the opportunities that exist for banks in managing wealth.
