Agood network of contacts is crucial in any business, particularly so in the sensitive world of private banking and wealth management, where trust is at the very heart of the client-adviser relationship. A high net worth individual will have to put his faith in a private banker or adviser for the management of the money he or his family may have built up over decades. When the adviser is introduced to him by someone he trusts, such as a friend or a professional he has had a long term business relationship with, he will feel partly reassured on his decision.
Although most institutions make direct contact with potential prospects and use intermediaries such as lawyers and accountancy firms to source new clients, they particularly welcome the referrals they get from existing customers and are keen to exploit all the connections they have within their internal networks. This is especially true in the case of integrated or multi-disciplined banks, such as Citi. “Access to qualified referrals or warm leads, afforded by the major banks’ networks, is a high quality source of new business for private banks,” says David Poole, head of Citi Private Bank in the UK.
“Clients don’t have to take the leap of faith inherent in direct or intermediated business, as they will be familiar with the brand and the service ethos of the house concerned.”
Mr Poole believes the effectiveness of internal referrals is dependent on the level of familiarity each business has with the other, the faith each has in the others’ business and on the personal relationships individuals in every part of the bank foster with one another. “Internal communications can be as necessary as external messaging to exploit this channel effectively,” he says.
A favourable structure
The corporate structure also assists the process, he believes, and it is mostly favourable when the private banking sits with the corporate and investment divisions. “Furthermore, physical proximity to colleagues in other business units enables ease of information flow on specific client prospecting opportunities,” says Mr Poole.
At Barclays Wealth, around 60 to 70 per cent of new clients come through internal network connections with the retail or corporate bank, while only the remaining 30 or 40 per cent comes through introduction from law firms or accounting practices, as well as direct contacts, explains Phil Smith, managing director at Barclays Wealth in the UK. With 20 per cent of the UK adult population having a Barclays retail account, the bank’s retail branches prove to be a great source of new business for the private banking division.
“Asset size is a good indicator that somebody might benefit form private banking, which is all about bespoke solutions. The initial filter is £500,000 (€570,000) but this figure is not applied rigidly. Extra filters such as ability to earn future high income, profession, age and residence all fall into the propensity modelling, which identifies the propensity of a particular client or a segment of clients to require private bank services,” says Mr Smith.
Barclays Wealth, which manages £151bn in clients’ assets, of which a third is sourced from the UK, applies this strategy wherever it has a retail and private banking presence. “We have always had this approach, but we’ve got better in identifying the right clients just by refining the modelling we use to identify their propensity, and by continuously improving our offering to the private bank,” he says.
What is also key is to make sure that private and retail bankers work closely together. Private bankers go out to Barclays’ retail branches and engage with the relationship managers, to ensure they know how to identify which of their clients could potentially benefit from private banking.
“All of our private bankers are ‘mapped’ to a number of retail bankers. We try to cover as many as we can, but as we are smaller than the retail world, we try to ensure that each of our private bankers works with a sufficient number of retail bankers without being over-stretched,” says Mr Smith.
Personal contact between advisers is something crucial in the information and marketing process. “What is quite powerful is that the retail bankers not only understand the private banking proposition, but they also get to know the person their client will be dealing with, because people always buy into people,” he says.
What drives any adviser to introduce their client to private banking or other services within the group is the desire to make sure the client must have the right proposition for his aims and objectives, he says. “Barclays’ ethos is about always giving the client the right proposition. The reason for the introduction is client driven, not pay driven. People are really passionate about clients and they want to make sure that if they have for example a good corporate relationship, they maintain it, and part of that is ensuring that everybody is looked after in the right way,” adds Mr Smith.
