Getting New HNW Clients from Financial Times

It's got many nuggets so I reproduce in toto:

By Ian Driscoll
Published: November 20 2007

Once a year, the Cleveland office of private bank The Glenmede Trust invites clients and prospective clients fly-fishing at an exclusive club in north-western Ohio. The all-day outing and lunch comes with the imprimatur of the bank's Philadelphia headquarters, which encourages its satellite offices to sponsor locally flavoured events.

"It has become something that people want to attend," says Chip Wilson, the bank's client services director.

He attributes the event's effectiveness to the mix of current and potential clients. "If your existing clients are your best referral sources, it's always good to have them mingling with prospective clients," he says.

But co-mingling existing and prospective clients is just part of the equation. "Whether aimed at clients or intermediaries, you have to find something that is somewhat different," Mr Wilson says. "And inviting them to another lecture on the current state of the economy doesn't light their fire."

He offers another clue as to why events such as the fly-fishing day are small yet essential elements in Glenmede's marketing effort: "Our differentiation is very hard to articulate in a print advertisement."

For private banks, courting customers can be an arduous process, one that may last several years. Complicating this is the desire for anonymity that many of the wealthy seek. Brand building may cultivate awareness, but when it comes to wooing prospective clients and getting them to sign on the dotted line, most banks rely on three tools: intermediaries, entertaining and referrals.

Known in industry jargon as "centres of influence", intermediaries are often viewed by clients as impartial advisers. "At the high end of the private banking model," says Carol Pepper, an industry veteran and family office head, "getting a name through an accountant or a lawyer is an effective way to reach potential clients."

Not only do private banks develop these relationships through one-on-one information sessions, but some also create targeted advertising for intermediaries.

"We do have specific adverts for capability awareness aimed at lawyers and CPAs," says Doug Regan, group president of wealth management at Northern Trust. "The advertising goes to centres of influence such as trade journals, or to where we could highlight our expertise in an area like estate planning."

Glenmede's Mr Wilson says his bank hosts a variety of engagements for intermediaries. Events range from a breakfast forum with the American College of Trust and Estate Counsel to less industry-specific talks with outside speakers such as Michael Beschloss, a presidential historian and author of several books.

The process can be very segmented, allowing banks to "speak" directly to certain existing and potential clients. UBS in particular has attracted new business because of its long-standing sponsorship of various art-related events.

"Our clients have different interests - art, philanthropy, music - and you have to communicate in a language that they understand," says UBS's John Strauss, head of private wealth management and chairman of the private bank. To that end, the bank invites some of its most important existing (and prospective) clients to Art Basel and Art Basel Miami.

In New York, the bank holds dinners or lectures where the guest numbers range from 15 to 40. The topic is not always art. Fouad Ajami, the Johns Hopkins University Middle East expert, spoke at one such event, a dinner followed by a Q&A. At these events says Mr Strauss, "the bank isn't talking about UBS. What we are hopefully conveying is that we are thinking on multiple levels."

When it comes to the ultra-high-net worth sector, Northern Trust's Mr Regan believes referrals are the gold standard. "While a brand-building campaign can help foster an image of solidity, giving your life savings to an organisation is a very intimate and personal process," he says. "The more the bank emphasis new services for its existing clients and keeps its attention on them, the more likely the bank is to benefit from referrals."

Northern Trust's wealth management group handles clients with minimum assets of $100m. Mr Regan says the unit recently launched a series of new initiatives for these ultra-high-net worth individuals. One such programme, titled "Inspiring Human Capital", aims to help families communicate their values to the next generation. Offerings like these, he says, "create a new kind of appreciation for the organisation", one that clients pass on to other wealthy individuals outside the Northern Trust fold.
Within its ultra-high-net-worth group, three quarters of Northern Trust's clients are referred through existing clients, says Mr Regan. Other banks claim referral rates that are equally high. So why do so many spend considerable sums on brand advertising? In fact, not all do.

JPMorgan Private Bank does not advertise, says a spokesman, adding that its existing customers are its best selling tool. That doesn't surprise Lucian Camp, chairman of the London-based financial advertising agency CCHM: Ping. "At the top, there may be some banks that will tarnish their image if they advertise," says Mr Camp.

However, he believes what holds for most advertisers also holds for most private banks. "Familiarity breeds favourability," he says, "and that's just as true of luxury brands as it is of other brands. We scarcely encounter these institutions unless they advertise. Given their invisibility and intangibility, they need to advertise."

One private bank heeding that kind of advice is the former US Trust. Now part of Bank of America, the renamed US Trust, Bank of America Wealth Management recently launched a $25mnational advertising campaign. Following the dissonance caused by its sale to Charles Schwab and then to Bank of America, the brand needed to be burnished.

In their print form, the adverts are a refreshing change. Eschewed are the wood panelled boardrooms and impeccably dressed bankers standing before oil paintings of their fiduciary ancestors. Absent, too, are the Bauhaus-like contemporary office settings also common to much of the industry's advertising.

Instead, the backdrops to US Trust's "New Face of Wealth" campaign, with its then-and-now undertones, include one advert featuring an everyday diner. To one side is a smaller image of a man and his extensive wine collection. The implication is that while the entrepreneur boasts a 2,000-bottle cellar, his values are solidly meatloaf.

The campaign is in part a response to several rounds of research. US Trust learned that both old and, primarily, new wealthy clients "have a core set of values that go back to their roots. And they want to deploy these values across all dimensions of their success - philanthropy, investing and their family," says Raj Seshadri, executive vice-president for strategy and marketing at the bank.

It remains to be seen if US Trust's focus on values succeeds. But its intent is to build not only brand but also consideration, says Ms Seshadri.

One way to build that consideration is through the constant "noise" of advertising. It's especially important, say some bankers, when the sell cycle can be anything from three months to four years. And unlike smaller banks and wealth providers that may face budgetary pressures to produce content-heavy advertising, the big ones have the resources to run more subliminal campaigns.

"It takes an average of 18 months to develop a new relationship, so that means it sometimes takes three to four years for a client to understand the conviction we have to serve them," says Mr Strauss of UBS. "Many people were very concentrated in an activity that created a large pool of assets. At that point they are experts in making widgets but not choosing a wealth provider."

But perhaps most important is a message that connects with the audience, such as UBS's "You and Us" campaign.
"The way we portray the firm is by using two people - that the relationship is about two people and not about the thousands of people and the deep resources the firm can offer," says Mr Strauss.

That portrayal worked, he adds, because feedback from customers shows "we have created a certain expectation that we will listen to our clients. The brand is one of our most important vehicles for acquiring new relationships".
Over at the much smaller Glenmede, where the bulk of business comes from referrals, "there's a tremendous debate about advertising", says Mr Wilson.

But he offers one reason why the bank will continue to advertise, and it is one that other bankers say applies to their institutions: "Our advertising should validate a client's decision to work with Glenmede."