Smarter profiling of the ultra wealthy

by Hansi Mehrotra

9th June 2014

KYC is not just about client identification but about really getting to know clients. Private banks can not only get a lot of information on ultra high net worth individuals/prospects with the help of Wealth-X but also devise much more targeted solutions for such clients. Jay Jhaveri says Indian private banking industry could learn from overseas counterparts and other industries.



Ultra high net worth individuals (UHNWIs) are used to bespoke solutions – whether for luxury goods or investment solutions. So any service provider approaching them should have done their homework about their situation and preferences. Luxury goods and service providers are doing precisely that.


“I was most impressed with a private jeweler came to us and said he wanted details of all those UNHWIs that have unmarried daughters between the age of 15 and 18. He wanted to reach out to them and start a conversation with them now because in a few years, their daughters will be of marriageable age and he wants to be the wedding jeweler. If bankers have similar strategies and insights into their marketplace, then they could develop a more strategic approach to new client acquisition,” suggests Sahil Mehta, head of business development for the Indian subcontinent at Wealth-X.


Wealth-X provides a database of curated research on ultra high net worth individuals (those with more than US$30 million of net assets) globally – a universe they estimate comprises roughly 200,000 people. The people behind this Singapore-headquartered firm have previously worked at Forbes and World-Check, hence they have the domain expertise and experience in compiling research on the rich.


Mehta said that client segmentation is also an important differentiator in today’s market. With so much impetus given to capturing market share, the focus to date has largely been on assembling teams that might have connections to certain client groups. However, there is not enough talent for every firm to do this. As a result, configuring the organisation and team in a way to pursue these clients in a segmented way needs to be the focus, he explained.


Mehta believes that organisations, whether private banks or other luxury providers, need to ensure a great client experience for UHNW individuals, which comes from insight and understanding. When advisers know their clients’ needs and wants, Mehta said they will be able to tailor their services accordingly, to ensure an effective client experience: “You need to provide bespoke solutions to entrepreneurs who need credit vs the older generation who are looking at leaving a legacy.”


Private banks in more developed markets like Switzerland already do this. Jay Jhaveri, head of Asia for Wealth-X, cited an example of a bank that requested details on private business owners worth over a $100 million where the patriarch is over 70 years old and had at least two children in the business. “The adviser was very clear that he wanted to focus on wealth and succession planning and had devised a marketing and client acquisition strategy accordingly,” he says.


KYC more than identification


Jhaveri believes private banks need to understand the true meaning of KYC (Know-Your-Customer). “KYC is not about merely identifying the person through one of the five forms of identity cards, or verifying the address through utility bills. That is client identification. KYC is knowing everything (or certainly as much as) there is to know about the client, their life story, wealth story, passions, interest, hobbies and philanthropic leanings,” adds Jhaveri.


Wealth-X has recently launched Wealth-X Diligence (WXD) to combine wealth intelligence and Know Your Customer (KYC) solutions for financial institutions and not-for-profit organisations to meet their regulatory requirements, plus mitigate reputational and commercial risk. WXD provides organisations with dossiers on UHNW individuals, detailing their source of wealth, significant litigation or sanctions, political inclinations and connections, wealth breakdown and analysis, business activities and asset holdings.


It is currently being offered to Wealth-X clients in 160 countries.
As a solution designed for KYC compliance, the enhanced WXD dossier incorporates the elements of anti-money laundering (AML) and anti-bribery and corruption (ABC) checks to ensure that clients discharge their regulatory responsibilities and understand any risks that may present themselves when dealing with a given UHNW individual and / or their known associates.


Wooing the next generation


Research by Wealth-X shows that there will be US$16 trillion in assets moving from one generation to the next over the next 30 years. This presents tremendous challenges & opportunities for private bankers/wealth managers that have to adapt to the preferences of those inheriting these vast quantum of wealth.


It is no longer important for the next generation to use the same banker as their father did, for example. Instead, he says that independent advisers are best placed to develop deeper relationships as they tend to know the family members a lot better, rather than an institution where the next generation has seen relationship managers change and indeed, banks vanish.


As a result, Jhaveri says wealth managers need to start getting to know the families a lot better. When the patriarch, for example, passes away, and the wealth is transferred to the next generation, that might result in some children inheriting more than others and indeed, some being disinherited altogether. Sometimes, one even hears of a large portion of the wealth being donated to a foundation rather than to family members.


So wealth managers need to have a holistic approach to be able to develop a meaningful relationship with all family members.


For Wealth-X, as a research company focused on the global UHNW segment, it looks at the macro trends in flows of assets around the world, and also at what is happening to this huge flow of money at the micro level.


Jhaveri believes wealth managers will need global networks of local experts. “You are going to need advisers that have a global outlook as this generation is going to have global businesses abroad. Their wealth planning will have to be global. One cannot just expect these services from the Big 4. It will be the local experts who should be able to bridge that gap to provide that service to their clients because they have that relationship. And they are going to have that relationship with the younger generation that is much deeper,” he predicts.