home
login
contact
about
Finance Dublin
Finance Jobs
 
Wednesday, 17th April 2024
    Home             Archive             Publications             Our Services             Finance Jobs             Events             Surveys & Awards             
Financial services on the move in Ireland Back  
The creation of more wealth in Ireland has meant there now greater demand for private banking services. Financial institutions are taking up the challenge writes John Rockett.
The turnaround in the Irish economy over the last decade has been well documented and commented upon. One of the less talked about aspects of this success story however is the growth of private wealth in Ireland and how people are managing their new found fortunes.

Reflecting the changing economic environment financial institutions are increasingly focusing their attentions on how best to attract and service the growing segment of clients called High Net Worth individuals (HNWI). In this regard many institutions are setting up separate entities specifically dedicated to HNWI and creating a Private Banking operation to service their needs.

So who are the clients of these operations and what services are they seeking? Broadly speaking clients fall into one or more of the following categories:

1) Professionals - accountants, solicitors, barristers, medical consultants, etc.

2) Executives - salaried executives of Irish public and private companies, and multinationals.

3) Entrepreneurs - successful owners or stakeholders in Irish private companies.

4) Property - The property boom in Ireland over the last 5/6 years has
Developers/owners been a major contributor to personal wealth creation.

5) Inheritors - This generation is seeing the real impact of growing family
wealth and generally smaller families on inheritances.

-2-

Private Banking as the term implies is not a mass market service. The target market is the top tier of actual or potential customers. These customers are looking for a variety of forms of wealth management rather than active entrepreneurs seeking equity or risk funding. Their behaviour will vary from those who take an active role in managing their assets and those who are quite passive. Some will have capital preservation as their primary objective whilst others will be most concerned with investment performance/return and growing their existing store of wealth still further.

From the Private Banking perspective the key operating challenges are "service" "service" "service". Private Banking distinguishes itself by an extremely high quality service in terms of advice, execution, and responsiveness.

Marketing of this service is unique as the traditional methods of advertising, cold calling, mailshots are inappropriate. Referral is the most successful and effective form for client acquisition. To achieve this referral process the Private Banker must have achieved a level of trust with his client which encourages the client to confidently introduce colleagues and friends to his personal Private Banker.

In Ireland, Private Banking has developed significantly over the last ten years and is likely to continue to grow at a strong pace in the foreseeable future . Many institutions apply screening criteria in relation to client acquisition. Such criteria normally relate to either income or existing net assets of the individual. Others seek to earn a minimum level of revenue from each client. Whichever method is used the Private Banking client will always have one or all of the following financial elements.

-3-
a) A high income or cashflow well in excess of typical life needs.
and/or
b) A sufficient capital base to be able to live in some comfort from the returns earned.
and/or
c) An ability to maintain a high lifestyle without work being a necessity.

The clients needs vary from traditional banking requirements such as current and deposit accounts to large property loans and share dealing finance. In the wealth management area they require stockbroking and investment management expertise. They may also require advice on inheritance tax planning, pensions, life assurance, trusts and wills. All these services can be accessed through their Private Banker.

In Ireland the industry is developing slightly differently then in other European countries where a long tradition of private banking exists. Irish clients place a much higher emphasis on bricks and mortar as an asset class than our European counterparts and consequently property - residential, office, retail or commercial supported by appropriate bank borrowing forms a much larger proportion of their total assets. As we all know property has delivered exceptional returns over the last 6/7 years aided by lowering interest rates, low inflation, excess demand, lowering yields, and rising rents. These conditions all combined at the same time to drive the market to its current level. The immediate outlook still looks positive although returns are unlikely to keep pace with the past. Clients are now looking to diversify their wealth and recent evidence suggests that share ownership is developing in Ireland and will become a major asset class for many clients. Private Banking will undoubtedly be to the forefront in advising clients as to how best to structure their portfolios and manage the risks associated with this transition.

-4-
As to the future undoubtedly monetary preservation and gain will continue to be an important benchmark when assessing the successful Private Banker. However as client's wealth continues to expand a change occurs. Greater attention is placed to developing longer term strategies which concentrate on the psychology of managing a family's wealth for the next or future generations and not on short term specific financial transactions. The assets will still be managed with a view to protecting their value against the primary evil, "Inflation" but other factors which impact on family wealth namely death, divorce and taxes must also be considered and actions taken. In Ireland these aspects are now being raised by financial advisors with their HNW clients. In some respects they pose new challenges for clients as they move from a position of "How to make it?" to "How to preserve it for the future".

Digg.com Del.icio.us Stumbleupon.com Reddit.com Yahoo.com

Home | About Us | Privacy Statement | Contact
©2024 Fintel Publications Ltd. All rights reserved.