Private banks step up efforts to court mega rich
GENEVA (Reuters) - The mega rich have become the hottest property in private banking and wealth managers are pulling out all the stops to court them, offering perks ranging from lunches with sports stars to track days at the Monaco Grand Prix circuit.
The focus on "ultra high net worth clients" marks a shift from an earlier strategy of chasing the "mass-affluent", or moderately rich, in an attempt to boost revenue on the back of this fast-growing segment.
Boston Consulting Group's latest global wealth report forecasts that households with more than $100 million will hold a total of $11.6 trillion of global private wealth by 2017, up from $7.5 trillion last year.
"If you are successful in acquiring one of these clients, this will move the needle," Rolf Boegli, head of premium clients at Credit Suisse, told the Reuters Global Wealth Management Summit this week.
For the Swiss bank, the ultra high net worth segment comprises clients with $50 million or more to invest.
"What you can't do is attract ultra high net worth individuals by mass mailing. You have to choose and look for the right platforms - money-can't-buy activities," Boegli said, adding that five groups of top clients will be invited to have dinner with tennis star Federer, the bank's brand ambassador.
Credit Suisse has also rented the Monaco Grand Prix circuit to allow premium clients to drive a classic car on the racetrack.
Another advantage of enormously wealthy clients is that they are more likely to be tax compliant, Boegli said, sparing banks from prickly negotiations and potential fines related to tax owed by foreign nationals to their home governments.
Credit Suisse has assembled 100 staff in a "solution partners" team dedicated to serving this client base, which now accounts for 42 percent of the assets in the Swiss lender's private bank, up from 33 percent in 2010.
In Asia, the segment's share of business is even higher. Credit Suisse's head of private banking for the region, Francesco de Ferrari, said that more than half its clients are in the top category.
"If you want to try this type of business in Asia, you need to have a strong investment bank," he said, echoing the sentiments of other private bankers resisting calls for investment banking operations to be separated from wealth management.
The idea of courting the mega rich with exclusive services is not entirely new - Barclays launched a "Little Book of Wonders" featuring such offers last year - but it is being pursued with new vigor thanks to the expected growth of the segment.
Credit Suisse estimates that there are 84,500 individuals across the globe with net assets exceeding $50 million. Of these, it says that 29,300 are worth at least $100 million and 2,700 breach the $500 million mark.
Catherine Weir, head of Citi's Global Family Office, said that the financial firepower of such clients means they can be more flexible with investments, helping to boost their wealth at twice the rate of other clients.
Unlike Credit Suisse, however, Citi prefers a more low-key approach for its top clients.
"We do very specific investment round tables and themed discussions ... We will host a dinner and clients can find out where we are in the cycle. That kind of engagement has served us extremely well on real estate, tech, interest rates, energy," she said.
(Additional reporting by Michael Flaherty; Editing by David Goodman)