Connecting With Younger HNW Clients - What Are Private Banks Doing?

Tom Burroughes

9 November 2021

Banks and wealth managers have known for years that they need to pivot towards younger affluent and high net worth adults. In the US, for example, a report in 2019 by , Germany’s largest lender and a major international wealth player, is directing significant resources to the younger client market, Claudio de Sanctis, head of the international private bank, CEO Deutsche Bank EMEA, told this news service recently. He spoke at the London Art Frieze exhibition in Regent’s Park, which the bank sponsors. (Some of his more general comments on the bank's strategy can be viewed in this article from yesterday.)

“To capture that next gen, we need to develop a digital proposition that is to largely stem from the bank for entrepreneurs and the ultra-high net worth business across every metric. For the affluent segment, we expect this to grow after we have developed the platform. We may see in three to five years that the growth from this segment could match our other two strategic pillars,” he said. (The “bank for entrepreneurs” refers to the integration of wealth management coverage and commercial bankers to cater to family-owned large Italian and Spanish companies and SMEs. The integration aims to provide holistic banking services at every stage of an entrepreneurial client’s life and business cycle, from business needs such as lending and corporate finance to advising on their private wealth management needs.)

As far as the broad mass-affluent category of clients - not only younger adults - Deutsche’s international private bank is “focused on the shift from a broad retail offering in Italy and Spain to a more focused offering for affluent clients,” de Sanctis said. “Spain is leading the charge, ahead of Italy, which will see the creation of enhanced digital services and a number of flagship branches in strategic locations, more tailored to the needs of the affluent client segment.” He declined to comment on the shape of a specific fee structure.

De Sanctis was asked how many conversations he has with clients about the risk, not just of threats such as inflation and trade disruptions, but also the danger of missing out on stronger markets, new sectors, and of people being too easily dominated by one mind-set.

“Almost every conversation we have with a client will involve an holistic discussion about both the opportunities and risks we see in the market at that time. So, in answer to your question, a lot!” he said.

“We know that changes in the economic environment often open up new perspectives, which might allow clients to take stock of previous habits or biases and therefore create room for change. As your question points out, today’s prudent risk manager must consider how to avoid missing opportunities as well as ways to reduce risks. Our relationship managers and their portfolio management teams are well versed in helping clients find ways to take advantage of these opportunities - even if they may be at the riskier end of the spectrum - by using hedging instruments as well as a traditionally diversified global asset allocation for example,” he said.

“A lot of clients are concerned about what the world will be like, not just because of COVID-19 but because we have had 10 years or so of zero interest rates. There is a clear consensus that this situation isn’t sustainable,” de Sanctis added.