Changing dynamics of the HNW market
A New World Wealth analysis of SA’s private wealth levels between 2007 and 2017 shows that the number of high net worth individuals (HNWI) — those with private wealth in excess of $1m — surpassed 43,500 in 2017. Based on the firm’s analysis, this figure will continue to rise over the next decade to reach 56,000.
According to the findings of the Intellidex 2018 Top Private Banks & Wealth Managers report, it is “young professionals” who are currently driving this growth, as this was the only client “archetype” to show an increase over 2017.
“That corresponds to our experience in the market, where younger entrepreneurs are emerging as a key growth sector,” says Cumesh Moodliar, SA Head of Private Banking at Investec. As more millennials enter the workplace, Moodliar says there has been a shift in the traditional career paths of young, highly qualified professionals. “These highincome earners tend to move more between employers, and are willing to start their own businesses, as this gives them more control of their futures.”
This dynamic also makes these individuals a highly prized market segment. “A young entrepreneur starts out in private banking, but as their business and income grow, they naturally transition to other services. Private Capital, for example, offers more bespoke financing solutions, while our property division finances retail, commercial and industrial properties for clients.”
The ability to facilitate and manage this organic growth through the client life cycle, by offering an end-to-end solution, is important for private banks and wealth managers that hope to grow both revenue and assets under management.
“This integration of services has been a key trend uncovered in the research over the past few years,” explains Colin Anthony, GM at Intellidex. “When we began this survey nine years ago, investment, stockbroking, asset management, fiduciary and other related services were done by separate divisions of a big firm, or outsourced. But they are now integrated because clients today expect all of their financial needs to be catered to at one place.”
He says the other key trend is the integration of technology aimed at improving the customer experience. This is essential to retain relevance and meet client expectations of engagement and digital capabilities, while maintaining a competitive advantage to attract these emerging HNWIs.