Private banks and multi-family offices plan to rely less on existing client referrals and more on tapping professional contacts, including accountants and attorneys. Conversely, brokerage firms will tone down their focus on professional referrals from lawyers and start to tap seminars and mine personal relationships to drum up new business, according to an exclusive Prince & Associates 2006 ceo survey.
MFOs, which have relied mainly on word of mouth for new clients, will turn to intermediaries as the well has started to run dry in the ultra-wealthy circles. “The super-rich are limited. You’re not going to use direct mail and it doesn’t happen that you run into a client with $100 million,” said Russ Prince, president. “The family offices are starting to recognize centers of influence as important, as they don’t really know anybody anymore with that kind of money.” The survey sampled 306 senior high-net-worth executives, including 113 private bankers, 81 brokerage firm heads and 112 MFO executive directors.
Private banks, which now rely on attorneys and accountants for new business, will have to polish networking skills beyond just swapping business cards, the survey found. “They have to approach this person like a client, and interview them to identify the opportunities,” Prince said. “They are recognizing it’s as important to know about the accountant’s wife and kids as much as the clients.’”
Brokerage firms, which have turned to professional referrals for fresh contacts, will instead boost their reliance on networking. HNW brokerage is typically a beat behind MFOs and private banks, and is now starting to take a lesson from them to work their current client base and build out personal relationships, Prince explained. He noted that seminars for the extremely wealthy have started to shrink.
Editor’s Note: This is the first of a series of articles that PAM will run featuring Prince & Associates’ 2006 CEO Survey.
| Importance of sources of new client relationships in 3 years | ||||
| Source | Private Bank | Brokerage | MFO | Total |
| Seminars or other events | 36.30% | 35.80% | 39.30% | 37.30% |
| Referrals from existing clients | 85.80% | 87.70% | 17.00% | 61.10% |
| Professional referrals – lawyers | 69.00% | 65.40% | 70.50% | 68.60% |
| Professional referrals – tax professionals | 76.10% | 66.70% | 57.10% | 66.70% |
| Professionals referrals – other | 4.40% | 19.80% | 25.90% | 16.30% |
| Advertising | 30.10% | 22.20% | 2.70% | 18.00% |
| Public relations | 16.80% | 19.80% | 19.60% | 18.60% |
| Direct mail | 7.10% | 16.00% | 0.00% | 6.90% |
| Networking/personal relationships | 72.60% | 64.20% | 61.60% | 66.30% |
| Importance of sources of new client relationships today | ||||
| Source | Private Bank | Brokerage | MFO | Total |
| Seminars or other events | 36.30% | 27.20% | 40.20% | 35.30% |
| Referrals from existing clients | 83.20% | 79.00% | 14.30% | 56.90% |
| Professional referrals – lawyers | 15.90% | 79.80% | 46.40% | 28.10% |
| Professional referrals – tax professionals | 20.40% | 22.20% | 27.70% | 23.50% |
| Professionals referrals – other | 8.00% | 4.90% | 14.30% | 9.50% |
| Advertising | 22.10% | 21.00% | 3.60% | 15.00% |
| Public relations | 10.60% | 11.10% | 17.00% | 13.10% |
| Direct mail | 7.10% | 13.60% | 0.00% | 6.20% |
| Networking/personal relationships | 65.50% | 53.10% | 72.30% | 64.70% |