High earning individuals have grown to expect tailor-made, personalised services from their wealth management provider. Consumers are also now demanding a more comprehensive approach from private banking.
Enrica Sighinolfi, a founding member of Opportunity Network, says the private banks need to build a deeper relationship with their customers to understand their concerns and motivations.
“Customers’ behaviour, knowledge, and preferences are changing at a comparable rate and demand a new approach, requiring financial institutions to rethink the relationships and interactions they have with their clients.”
The private banking industry is a highly competitive industry with all South Africa’s major banks having their own offering to attract high-net-worth individuals.
Euromoney earlier this year published its annual Private Banking and Wealth Managment Survey for 2018. In South Africa, Investec came first, RMB Private Bank second, Nedbank Private Wealth third, Absa fourth and Standard Bank fifth.
Euromoney defines private banking as financial services targeted at individuals who have over $1 million in investable assets.
The pros of private banking, said Andy Rachleff, chief executive of American investment management company Wealthfront, are:
- Private bankers can hold your hand through turbulent markets.
- They often provide financial planning advice like how much you can afford to pay for a house.
- They can introduce you to expert estate planners and tax advisers.
- They can offer mortgages and lines of credit at attractive interest rates and with a faster turnaround.
Rachleff said private bankers’ fees were typically 1 - 1.5% of assets under management.