With continued competition to retain clients, we’ve seen some private banks dangle extras—from complimentary front row concert seats to vacations at exclusive resorts—in order to get wealthy individuals in the door. While it might be a tactic that can tip the balance in favor of one provider over another, does it only succeed if all other services fundamental to private banking are up to par?
This was the main focus of our BNY Mellon Wealth Management survey in partnership with Brown Yardley Research. We gathered responses from 300 wealthy individuals—all with at least $5 million in total assets—around what motivated them to choose one provider over another, and what made them become a long-term client.
When asked what attributes they considered “very important” in the process of selecting private banking services, 54% of respondents said complementary access to premium benefits, while 51% gave the same rating for both generous rewards programs and concierge services.
Having a dedicated private banker, attractive interest rates and current technology were voted the top three most important features for a private bank. However, only 5% included concierge services in their top three priorities when looking for a banking partner.
What investors say is important and what will motivate them to consider a provider are two different stories. A dedicated banker offering attractive fees and strong technology are must-haves, but are also table stakes rather than differentiating features. Other features that are more likely to act as differentiators and drive consideration include generous rewards programs and complimentary access to premium benefits.
It’s clear that dazzling prospects with lifestyle gifts can only go so far. Turning an account into a life-long relationship requires the premium service that trumps all others: the ability to help a client preserve and protect their wealth to achieve success when they least expect it is the ultimate concierge service.
To do that, banks should consider offering a dedicated private banking team as part of each client’s entourage of wealth management experts. An approach to concierge services should be less about lifestyle extras and more about giving each client the kind of financial analysis and solutions that investment banks give to their biggest corporate clients.
Typically, growing wealth is thought of as increasing asset performance. But wealth is best optimized when both sides of the balance sheet are considered—an individual’s assets and liabilities. An institution that employs their private bankers, mortgage bankers and wealth managers to analyze a private client’s assets and liabilities like it’s an institutional balance sheet will stand out. The techniques we use at BNY Mellon to maximize an institution’s liquidity and investments are very applicable to a wealthy individual.
Consider a situation that occurred in the early months of the pandemic. A hotel owner client saw his revenue stream all but evaporate overnight as a result of the lockdown. Given most of the wealth was illiquid, his banker leveraged a personal investment portfolio to support the hotel’s cashflow needs, establishing a multi-million-dollar line of credit so the client could keep the hotel afloat. In this case, working with a banker who was quick to apply disciplined, institutional methods resulted in total protection of the client’s wealth and optimization of their balance sheet. And that—especially in times of downturn—is what enhances trust and creates a lifelong client partnership.