HNW Targeting and Retention Strategies

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