Wealth Management

Let me start this blog by confessing that I have never worked in the wealth management function of any bank. I remember that earlier high net worth clients (HNC) used to get a dedicated "relationship manager" (RM) to ensure quick and efficient service. Of late, in the last few years, the RM has got substituted with more appealing term - Wealth Manager (WM).

Banks have gone about slicing their customers based on relationship value into 2-3 levels of HNC. As the relationship value increases, a higher level of WM is assigned to the client. The attempt of all banks seems to be to retain and enhance the relationship value of the clients by getting a higher "share of wallet".

Banks should not be inward looking when dealing with HNC. For example, the very definition of HNC should not be based on existing relationship value but on potential value. It does not matter that the customer hsa a small balance in the savings account if you know that the customer is a high potential / high profile client. So, some amount of local knowledge and some amount of research would be required while defining clients.

When dealing with HNC, many banks make a classic mistake of looking at things from their own perspective rather than the client's. What does the client seek from the bank? Given below are some of the key expectations of HNC:

1. Recognition without introduction
2. Exclusive service in terms of speed & treatment
3. Security & confidentiality of personal information
4. Information on opportunities to increase wealth based on risk appetite
5. Solution for all banking requirements - domestic & international
6. Advisory services

Without identifying the needs of the HNC, wealth management cannot make much progress. Many banks make a mistake of not securing the customer's confidential information. Also, a lack of coordination between marketing, sales and service departments can prove disastrous.

A classic mistakes some banks do is try to target all segments of customers and increase its numbers of customers. While this may look exciting in the short run, it results in confusing the customers about what the brand stands for. A bank needs to create exclusive zones / branches / channels for its HNC. If it tries to mix up the HNC with ordinary customers, the HNC might feel delineated and upset.

The other interesting fact is that most HNC do not come themselves to the branch but send a representative who could be a domestic servant, a driver etc. The banks should have an ability to 'spot' such proxies and serve them well. An error or oversight here could have indirect repercussions.

Many banks are happy to have large savings balances from the HNC as it helps reduce their cost of funds. However, if the bank does not attempt to educate the customer or give options to improve his earnings, it can boomerang in the long run. Similarly, banks should always feed information to the HNC on opportunities to increase wealth. Exclusive offers, special schemes, off market deals etc. which are not ordinarily available to regular customers should be offered. The customer should be made to feel that the bank is working for him and is interested in increasing his wealth.

Banks with strong research capabilities stand a better chance of impressing its HNC with their timely information, insightful analysis etc. The bank should be in a position to Suo Motu offer specialist advice to the HNC on every significant event that occurs which can impact the HNC's portfolio.

Wealth management is not every bank's cup of tea. Unless the bank is prepared to work smartly towards it and does everything necessary to stay clued on with the customers needs and the latest developments in the market place, it may have a wealth management function only on paper.

I would love to hear your views on this blog. Please feel free to leave a comment on the blog or send me a mail at vish.sesh@gmail.com and I will quickly respond.