Summary
"HNW Targeting and Retention Strategies", report analyzes and sizes key segments of the global HNW market, and provides detailed recommendations how to best target and service these individuals. The report also provides a detailed discussion on the effectiveness of different HNW client retention strategies. It is based on our proprietary Global Wealth Managers Survey.
48% of HNW individuals are professionals, making them the largest target market, closely followed by entrepreneurs at 46%. While considerably smaller in size, providers will also find HNW expats an attractive segment thanks to their more complex affairs resulting in a greater need for wealth management services. Despite the above segments� differing service requirements, we see very little difference when it comes to providers� targeting strategies. While client referrals are the most successful means of acquisition, wealth managers should adopt a more differentiated approach. Providers targeting professionals will find external referrals an effective channel, while investment banking referrals will prove fruitful in the entrepreneur space.
Specifically the report -
- analyzes the size of the global HNW market and key client groups
- analyzes the proportion of HNW clients sourced via different client acquisition tools
- provides recommendations regarding the effectiveness of various acquisition tools across different target segments
- analyzes how to best service different HNW segments
- analyzes the effectiveness of different client retention strategies in the HNW space.
Scope
- 52.3% of global HNW investors reside in North America, but growth is more pronounced in Latin America, where the number of HNW individuals is forecast to grow by 48% between 2017 and 2021.
- Professionals make up 5 million individuals of the global HNW market, 4.8 million being entrepreneurs.
- 28.3% of HNW clients have been acquired through client referrals, making it the most successful channel.
- A longstanding advisor relationship is the most effective means of client retention, followed by portfolio performance and a firm�s brand image.
Reasons to buy
- Understand the size and service requirements of key client groups
- Develop and enhance your client targeting strategies using our proprietary data on the effectiveness of various targeting strategies across key target groups
- Minimize customer churn rates by gaining a detailed understanding of the effectiveness of different retention tools
- Tailor your product portfolio to match demand patterns across the different segments discussed
- Understand what selected competitors are doing to successfully reach out to different target groups.
Companies Mentioned are -
US Bank
DBS
BNP Paribas
Optymyze
CBA
Deutsche Bank
Morgan Stanley
ICBC
China Construction Bank
Bank of China
Agricultural Bank of China
Wells Fargo
China Merchants Bank
Aldermore
Table Of Content
Table of Contents
1. EXECUTIVE SUMMARY 1
1.1. Professionals and entrepreneurs make up the vast majority of the 10.5 million-strong HNW population 1
1.2. Key findings 1
1.3. Critical success factors 1
2. HNW ENTREPRENEURS AND PROFESSIONALS COMPRISE ALMOST EQUALLY LARGE TARGET GROUPS 8
2.1. North America is the largest target market, but growth can be found in Latin America and Asia Pacific 8
2.1.1. A comparatively high proportion of unadvised HNW wealth makes Asia Pacific an attractive target market 9
2.1.2. A focus on emerging markets promises rapid business growth, but reaching out to investors early on is paramount 11
2.2. Professionals constitute the largest target market, closely followed by entrepreneurs 11
2.2.1. Professionals constitute the largest target group globally 12
2.2.2. The entrepreneurial spirit runs high in Eastern Europe 13
2.2.3. HNW entrepreneurs are willing to expatriate to start their business ventures 16
2.2.4. While only constituting 11.4% of the global HNW population, the wider expat community also make for a lucrative target market in key hubs 17
2.3. The demographic profiles of key HNW segments differ only marginally, with the exception of inheritors 18
2.3.1. Female inheritors are an often overlooked segment 18
3. PROVIDERS SHOULD PURSUE A MORE TAILORED APPROACH WHEN REACHING OUT TO DIFFERENT SEGMENTS 20
3.1. A high degree of competition calls for tailored acquisition strategies 20
3.2. Client referrals are the number one source of new business, followed by relationship managers own contacts, and internal referrals 21
3.2.1. Generating positive word of mouth is paramount in the HNW space 21
3.2.2. Despite coming in second as a customer acquisition tool, internal referrals remain underutilized 23
3.2.3. The importance of relationship managers own contacts as an acquisition tool calls for a greater focus on brand building 25
3.2.4. Cold-calling is not an effective means of reaching out to HNW individuals 26
3.3. Targeting professionals means leveraging cross-selling opportunities with the SME banking department 27
3.3.1. Professionals running small businesses will appreciate a wide array of lending products 27
3.3.2. Given professionals broader servicing needs, close collaboration with the SME banking team is critical 28
3.3.3. Providers targeting self-employed professionals should place greater attention on external partnerships 29
3.3.4. Internal partnerships are a critical channel of new business in markets where wealth is predominately held in the hands of the mass affluent 31
3.4. Investment banking referrals are critical when targeting entrepreneurs 32
3.4.1. Globally, 7.8% of HNW entrepreneur clients have been sourced through investment banking referrals 32
3.4.2. Partnerships with accelerators will allow wealth managers to target entrepreneurs at an early stage 33
3.4.3. Involving the next generation of business owners is a must in countries with an aging entrepreneurial community 34
3.5. International providers enjoy an advantage targeting expats, but domestic ones will find external referrals effective 36
3.5.1. Reaching out to expats pre-departure and establishing intra-country referral structures is critical 36
3.5.2. External partnerships are particularly important for domestically focused players 38
4. WEALTH MANAGERS SHOULDNT SOLELY RELY ON ADVISORS TO FOSTER LOYALTY 40
4.1. Advisors are critical in fostering loyalty 40
4.1.1. Having a CRM system in place minimizes the risk of client loss when a relationship manager leaves 41
4.1.2. Creating multiple client touchpoints within the organization reduces the reliance on a single advisor 42
4.2. Extensive brand-building efforts, an outstanding track record, and a wide service proposition all contribute to customer loyalty 42
4.2.1. While critical as a retention tool, the importance of a positive investment track also poses challenges in times of increased market volatility 42
4.2.2. Brand building on a corporate level has to be more of a focus 43
4.2.3. A broad product offering reduces the likelihood of clients reaching out to competitors 44
5. APPENDIX 46
5.1. Abbreviations and acronyms 46
5.2. Definitions 46
5.2.1. Entrepreneur 46
5.2.2. Expat 46
5.2.3. HNW 46
5.2.4. Professional 46
5.3. Supplementary data 47
5.4. Methodology 52
5.4.1. GlobalDatas 2017 Global Wealth Managers Survey 52
5.4.2. GlobalDatas 2016 Global Wealth Managers Survey 52
5.4.3. GlobalData WealthInsight 52
5.4.4. Global Wealth Model methodology 53
5.4.5. Effectiveness score 53
5.4.6. Service level of demand score 53
5.4.1. Exchange rates 53
5.5. Bibliography 54
5.6. Further reading 55
Table & Figure
FAQ's
Methodology
Identifying Key Products in the Market
- The identification of key products in any market is pivotal for understanding what drives consumer interest, technological innovation, and competitive advantage. Here’s how to approach this:
- Market Analysis Reports: Start with syndicated market analysis reports from firms like Nielsen, Euromonitor, or specialized industry analysts. These reports often highlight leading products based on sales data, innovation, and consumer feedback.
- Patent Filings: Reviewing patent filings can provide insight into technological innovations and future products that may impact the market. Databases like the United States Patent and Trademark Office (USPTO) or the World Intellectual Property Organization (WIPO) can be invaluable.
- Ecommerce Platforms and Retailer Websites: Analyzing bestselling products and customer reviews on platforms such as Amazon, Flipkart, or direct retailer websites can offer direct insights into consumer preferences and product popularity.
- Consumer Surveys and Feedback: Conducting surveys or analyzing online forums and social media can reveal consumer preferences, pain points, and desired features in products. Tools like SurveyMonkey, Google Surveys, or social listening platforms can facilitate this process.
Segmenting the Market and Products
- Market and product segmentation is crucial for targeting marketing efforts and product development. Here’s a methodology for segmenting based on technical specifications:
- Technical Specifications Review: Compile a comprehensive list of products within the market, focusing on their technical specifications. This could involve processor speeds for electronics, ingredients for food products, or material composition for apparel.
- Factor Analysis: Use statistical techniques like factor analysis to group products based on shared technical specifications. This method helps identify underlying relationships between different specifications and how they cluster together.
- Expert Consultation: Engage with industry experts or technical specialists to ensure that the segmentation makes sense from both a market and a technical perspective. This step ensures the practical relevance of the segments identified.
Identifying and Classifying Key Application Segments
- Understanding how products are used in different applications is essential for market strategy:
- Use Case Analysis: Identify common use cases for products by reviewing product literature, customer testimonials, and case studies. This helps understand the variety of applications each product serves.
- Industry Surveys: Conduct surveys targeting professionals in the field to understand how and why certain products are preferred in specific applications. This can also reveal unmet needs in the market.
- ApplicationBased Segmentation: Group products based on their primary applications, considering factors such as industry use, consumer vs. professional use, and environmental conditions.
Calculating Market Size Using TopDown and BottomUp Approaches
- Estimating the market size accurately is fundamental for strategic planning:
- TopDown Approach: Start with global industry data and narrow down to the target market by applying known market shares or segmentation percentages. Industry reports and financial databases are key sources for this approach.
- BottomUp Approach: Aggregate sales data or unit shipments from all known market participants. This might require gathering data from company reports, industry associations, and sales channels.
- Combining Approaches: Validate the market size estimates by comparing the results from both approaches. Discrepancies can highlight areas requiring further investigation.
Calculating the CAGR for the Market
- The Compound Annual Growth Rate (CAGR) is a useful measure to understand market growth over time:
- Historical Sales Data: Gather historical sales or market size data over a defined period. Public company filings, industry reports, and government databases can be sources for this data.
- CAGR Formula: Apply the CAGR formula \[CAGR = (EV/BV)^{1/n} 1\], where EV is the end value, BV is the beginning value, and n is the number of periods.
- Segment and Overall Market CAGR: Calculate CAGR for both the overall market and individual segments to understand growth patterns.
Sources for Secondary or Desk Research
- Identifying the right sources is crucial for accurate desk research:
- Industry and Market Research Reports: Sources like IBISWorld, Statista, and Frost & Sullivan offer comprehensive industry reports.
- Government and International Organizations: Websites of the U.S. Census Bureau, World Bank, and OECD provide economic and industry specific data.
- Academic Journals: Platforms like Google Scholar and JSTOR can offer peer reviewed articles on market trends and consumer behavior.
- News Archives and Trade Publications: Stay informed on industry developments through sources like Bloomberg, Reuters, and specific trade journals relevant to the market in question.
- Each of these steps requires careful consideration and a systematic approach to ensure that the market research report is robust, insightful, and actionable.
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