Private Banks – What Are They Doing Wrong?

Felix Thomson

Content Executive

The Financial Services Forum

The number of wealthy individuals with more than £1 million of liquid assets is growing fast. But the private banks don’t appear to be attracting a significant share of this potentially profitable market. James Lawson takes a look at how the banks can reach these high net worth individuals and retain them as clients.
The weakness and opportunity
The wealthy are used to turning to professionals for help. Ledbury’s research has shown that when these individuals need legal advice, they turn to their lawyers, when they need accounting advice, they turn to their accountants. Yet when they need help with their financial lives, many don’t know where to turn. Some will turn to their family and friends, or perhaps their lawyers. But very few will call upon their private bank. Why is this happening?
It’s not because they don’t use professional advisors. Using Ledbury’s UK Millionaires Panel, three-quarters currently have an accountant that they use already. The next most popular professional relationship is with Independent Financial Advisors (IFAs), which are used by 68% of the UK’s millionaires.
A meagre 36% currently use a wealth manager or private bank, despite the fact that they all meet the minimum investable asset criteria to have an account at most of the major private banks (see Chart 1). In fact, the wealthy are more likely to use an insurance broker and full service investment broker before they turn to their wealth manager. The wealthy are actually twice as likely to use an accountant (2.1 times) or an IFA (1.9 times) before they turn to a private bank. So what is it that private banks are doing wrong?
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