Etude

What millionaires expect from their bank

For years now, pressure on wealth management has been rising in Germany amid limited potential for returns and rising costs.

Par Dr. Dirk Vater and Dr. Nikola Glusac

First published on novembre 28, 2014
min


Please note: This study is only available in German. For years now, pressure on wealth management has been rising in Germany amid limited potential for returns and rising costs. Persistently low interest rates, relentless competition and radically changing customer behavior are narrowing the potential for returns, and the tighter regulatory requirements are heightening complexity and costs. In response to this unsatisfactory situation, wealth managers in Germany have felt compelled to review and realign their business models. At the heart of their strategic considerations lies the client and his demands and expectations. Most high net worth individuals (HNWIs) believe that wealth managers do a very good job. On average, Germany's millionaires have three bank connections, accumulate as much as 70 percent of their assets at their primary bank and, unlike other areas of the financial industry, are satisfied with the services rendered by their financial partners. Nonetheless, a good 30 percent of those questioned signaled a readiness for change. This apparent contradiction can be partially attributed to the imprecise positioning of many suppliers. For HNWIs, the greatest potential for differentiation lies in the spectrum of products in the broad sense, in the brand and in the expertise of advice. Digitalization also set to change wealth management However, more will be needed than just qualified advice and the right products for banks to survive in the 21st century competition. Similar to the mass business, a comprehensive range of digital solutions will become a must in the business with prosperous private clients seeking to benefit from enhanced interaction with their bank and simplified access to information. Digitalization also poses another special challenge. The more independently the clients operate, the greater the temptation for them to invest and manage at least part of their assets themselves via direct banks or other platforms. The only way for established players to counter this trend is by fostering digitalization whilst at the same time bonding with their clients through rigorous and disciplined advice. An approach of this kind is in tune with the expectations of wealthy individuals and will thus play a definitive role in boosting loyalty. This in turn will raise the potential for higher returns. In wealth management the same principle applies: Loyal customers buy more products, remain true to a bank for longer and drive new business with their recommendations. The key to success in wealth management thus lies in systematic client orientation and razor-sharp positioning. Banks focusing their strategy on these issues and aligning their business model with this policy will gain a clear edge over their rivals in the fierce competition that is lying ahead. Download PDF

Please note: This study is only available in German.

For years now, pressure on wealth management has been rising in Germany amid limited potential for returns and rising costs. Persistently low interest rates, relentless competition and radically changing customer behavior are narrowing the potential for returns, and the tighter regulatory requirements are heightening complexity and costs. In response to this unsatisfactory situation, wealth managers in Germany have felt compelled to review and realign their business models. At the heart of their strategic considerations lies the client and his demands and expectations. Most high net worth individuals (HNWIs) believe that wealth managers do a very good job.

On average, Germany's millionaires have three bank connections, accumulate as much as 70 percent of their assets at their primary bank and, unlike other areas of the financial industry, are satisfied with the services rendered by their financial partners. Nonetheless, a good 30 percent of those questioned signaled a readiness for change. This apparent contradiction can be partially attributed to the imprecise positioning of many suppliers. For HNWIs, the greatest potential for differentiation lies in the spectrum of products in the broad sense, in the brand and in the expertise of advice.

Digitalization also set to change wealth management

However, more will be needed than just qualified advice and the right products for banks to survive in the 21st century competition. Similar to the mass business, a comprehensive range of digital solutions will become a must in the business with prosperous private clients seeking to benefit from enhanced interaction with their bank and simplified access to information. Digitalization also poses another special challenge. The more independently the clients operate, the greater the temptation for them to invest and manage at least part of their assets themselves via direct banks or other platforms. The only way for established players to counter this trend is by fostering digitalization whilst at the same time bonding with their clients through rigorous and disciplined advice.

An approach of this kind is in tune with the expectations of wealthy individuals and will thus play a definitive role in boosting loyalty. This in turn will raise the potential for higher returns. In wealth management the same principle applies: Loyal customers buy more products, remain true to a bank for longer and drive new business with their recommendations. The key to success in wealth management thus lies in systematic client orientation and razor-sharp positioning. Banks focusing their strategy on these issues and aligning their business model with this policy will gain a clear edge over their rivals in the fierce competition that is lying ahead.

Download PDF