HNW Targeting and Retention Strategies

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"HNW Targeting and Retention Strategies", report analyzes and sizes key segments of the global HNW market, and provides detailed recommendations how to best target and service these individuals. The report also provides a detailed discussion on the effectiveness of different HNW client retention strategies. It is based on our proprietary Global Wealth Managers Survey.

48% of HNW individuals are professionals, making them the largest target market, closely followed by entrepreneurs at 46%. While considerably smaller in size, providers will also find HNW expats an attractive segment thanks to their more complex affairs resulting in a greater need for wealth management services. Despite the above segments’ differing service requirements, we see very little difference when it comes to providers’ targeting strategies. While client referrals are the most successful means of acquisition, wealth managers should adopt a more differentiated approach. Providers targeting professionals will find external referrals an effective channel, while investment banking referrals will prove fruitful in the entrepreneur space.

Specifically the report –
– analyzes the size of the global HNW market and key client groups
– analyzes the proportion of HNW clients sourced via different client acquisition tools
– provides recommendations regarding the effectiveness of various acquisition tools across different target segments
– analyzes how to best service different HNW segments
– analyzes the effectiveness of different client retention strategies in the HNW space.

Scope

– 52.3% of global HNW investors reside in North America, but growth is more pronounced in Latin America, where the number of HNW individuals is forecast to grow by 48% between 2017 and 2021.

– Professionals make up 5 million individuals of the global HNW market, 4.8 million being entrepreneurs.

– 28.3% of HNW clients have been acquired through client referrals, making it the most successful channel.

– A longstanding advisor relationship is the most effective means of client retention, followed by portfolio performance and a firm’s brand image.

Reasons to Buy

– Understand the size and service requirements of key client groups

– Develop and enhance your client targeting strategies using our proprietary data on the effectiveness of various targeting strategies across key target groups

– Minimize customer churn rates by gaining a detailed understanding of the effectiveness of different retention tools

– Tailor your product portfolio to match demand patterns across the different segments discussed

– Understand what selected competitors are doing to successfully reach out to different target groups.

US Bank
DBS
BNP Paribas
Optymyze
CBA
Deutsche Bank
Morgan Stanley
ICBC
China Construction Bank
Bank of China
Agricultural Bank of China
Wells Fargo
China Merchants Bank
Aldermore

Table of Contents

Table of Contents

1. EXECUTIVE SUMMARY 1

1.1. Professionals and entrepreneurs make up the vast majority of the

10.5 million-strong HNW population 1

1.2. Key findings 1

1.3. Critical success factors 1

2. HNW ENTREPRENEURS AND PROFESSIONALS COMPRISE ALMOST EQUALLY LARGE TARGET GROUPS 8

2.1. North America is the largest target market, but growth can be found in Latin America and Asia Pacific 8

2.1.1. A comparatively high proportion of unadvised HNW wealth makes Asia Pacific an attractive target market 9

2.1.2. A focus on emerging markets promises rapid business growth, but reaching out to investors early on is paramount 11

2.2. Professionals constitute the largest target market, closely followed by entrepreneurs 11

2.2.1. Professionals constitute the largest target group globally 12

2.2.2. The entrepreneurial spirit runs high in Eastern Europe 13

2.2.3. HNW entrepreneurs are willing to expatriate to start their business ventures 16

2.2.4. While only constituting

11.4% of the global HNW population, the wider expat community also make for a lucrative target market in key hubs 17

2.3. The demographic profiles of key HNW segments differ only marginally, with the exception of inheritors 18

2.3.1. Female inheritors are an often overlooked segment 18

3. PROVIDERS SHOULD PURSUE A MORE TAILORED APPROACH WHEN REACHING OUT TO DIFFERENT SEGMENTS 20

3.1. A high degree of competition calls for tailored acquisition strategies 20

3.2. Client referrals are the number one source of new business, followed by relationship managers’ own contacts, and internal referrals 21

3.2.1. Generating positive word of mouth is paramount in the HNW space 21

3.2.2. Despite coming in second as a customer acquisition tool, internal referrals remain underutilized 23

3.2.3. The importance of relationship managers’ own contacts as an acquisition tool calls for a greater focus on brand building 25

3.2.4. Cold-calling is not an effective means of reaching out to HNW individuals 26

3.3. Targeting professionals means leveraging cross-selling opportunities with the SME banking department 27

3.3.1. Professionals running small businesses will appreciate a wide array of lending products 27

3.3.2. Given professionals’ broader servicing needs, close collaboration with the SME banking team is critical 28

3.3.3. Providers targeting self-employed professionals should place greater attention on external partnerships 29

3.3.4. Internal partnerships are a critical channel of new business in markets where wealth is predominately held in the hands of the mass affluent 31

3.4. Investment banking referrals are critical when targeting entrepreneurs 32

3.4.1. Globally, 7.8% of HNW entrepreneur clients have been sourced through investment banking referrals 32

3.4.2. Partnerships with accelerators will allow wealth managers to target entrepreneurs at an early stage 33

3.4.3. Involving the next generation of business owners is a must in countries with an aging entrepreneurial community 34

3.5. International providers enjoy an advantage targeting expats, but domestic ones will find external referrals effective 36

3.5.1. Reaching out to expats pre-departure and establishing intra-country referral structures is critical 36

3.5.2. External partnerships are particularly important for domestically focused players 38

4. WEALTH MANAGERS SHOULDN’T SOLELY RELY ON ADVISORS TO FOSTER LOYALTY 40

4.1. Advisors are critical in fostering loyalty 40

4.1.1. Having a CRM system in place minimizes the risk of client loss when a relationship manager leaves 41

4.1.2. Creating multiple client touchpoints within the organization reduces the reliance on a single advisor 42

4.2. Extensive brand-building efforts, an outstanding track record, and a wide service proposition all contribute to customer loyalty 42

4.2.1. While critical as a retention tool, the importance of a positive investment track also poses challenges in times of increased market volatility 42

4.2.2. Brand building on a corporate level has to be more of a focus 43

4.2.3. A broad product offering reduces the likelihood of clients reaching out to competitors 44

5. APPENDIX 46

5.1. Abbreviations and acronyms 46

5.2. Definitions 46

5.2.1. Entrepreneur 46

5.2.2. Expat 46

5.2.3. HNW 46

5.2.4. Professional 46

5.3. Supplementary data 47

5.4. Methodology 52

5.4.1. GlobalData’s 2017 Global Wealth Managers Survey 52

5.4.2. GlobalData’s 2016 Global Wealth Managers Survey 52

5.4.3. GlobalData WealthInsight 52

5.4.4. Global Wealth Model methodology 53

5.4.5. Effectiveness score 53

5.4.6. Service level of demand score 53

5.4.1. Exchange rates 53

5.5. Bibliography 54

5.6. Further reading 55

Table

List of Tables

Table 1: Asia Pacific: proportion of different HNW segments acquired by channel 48

Table 2: Europe: proportion of different HNW segments acquired by channel 49

Table 3: Rest of world: proportion of different HNW segments acquired by channel 50

Table 4: Asia Pacific: customer retention strategy effectiveness score by segment 51

Table 5: Europe: customer retention strategy effectives score by segment 51

Table 6: Rest of world: customer retention strategy effectives score by segment 51

Table 7: US dollar exchange rates with the euro 53

Figures

List of Figures

Figure 1: More than half of HNW investors can be found in North America 9

Figure 2: An above-average proportion of HNW wealth in Asia Pacific remains unmanaged 10

Figure 3: Those who sourced their wealth through earned income constitute 48% of HNW investors globally 12

Figure 4: South Africa is home to a large segment of HNW professionals 13

Figure 5: Eastern Europe is home to a sizable HNW entrepreneur community 14

Figure 6: Lenddo leverages digital data to assess credit risk 15

Figure 7: Business start-ups are the number one expatriation driver in the HNW space 16

Figure 8: DBS targets international entrepreneurs 17

Figure 9: The US is home to the largest number of HNW expats 18

Figure 10: 38% of HNW inheritors are female 19

Figure 11: Competition for HNW investors is fierce 21

Figure 12: Client referrals are the single most important source of new clients 22

Figure 13: BNP Paribas’ Hackathon event brings together entrepreneurs from all across the world 23

Figure 14: US Bank operates Optymyze Sales Application Studio to harvest internal referrals 25

Figure 15: A relationship manager’s own contacts are of particular importance in Canada 26

Figure 16: With the exception of France and Germany, cold calling is not widely adopted in the HNW space 27

Figure 17: CEOs and MDs make for a lucrative target market in Australia 29

Figure 18: 15.1% of HNW professionals have been acquired via partners’ referral programs 31

Figure 19: 7.8% of HNW entrepreneur customers have been sourced through investment banking referrals 33

Figure 20: Entrepreneurial intentions run high in the UAE 34

Figure 21: 85% of business owners in the US are 65 years of age or above 35

Figure 22: Credit Suisse targets the next generation of HNW investors early on 36

Figure 23: A mere 15% of new HNW expat clients have been sourced through retail banking referrals 37

Figure 24: Singapore attracts a significant international workforce 39

Figure 25: Advisors play a crucial role in fostering loyalty 40

Figure 26: A longstanding advisor relationship is the most important means of client retention 41

Figure 27: Portfolio performance as a means of client retention is of particular importance in the Netherlands 43

Figure 28: Chinese HNW investors place significant importance on brand image 44

Figure 29: For seven out of 10 private banking services demand exceeds supply 45

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