Affluent investors abandon traditional wealth managers

Lorna Bourke

As the big banks write off billions, the dissatisfied ‘new rich’ are switching to the rising stars among the smaller independent banks, says Lorna Bourke

Following Collardi at the top comes 36-year-old Peter Charrington, head of Citigroup Private Bank in the UK, with Burkhard Varnholt, the chief investment officer of Bank Sarasin, in third place.

All the banks are courting wealthy individuals. In particular, it is the new rich – entrepreneurs who have built up a business and are now worth £10 million or more – whom the private banks are keen to attract. These individuals now account for over 50 per cent of all high net worth clients.

And there is a lot of money out there. The most recent 2007 World Wealth Report from Merrill Lynch Cap Gemini estimates that the value of funds managed on behalf of 9.5 million high net worth individuals – those with over $1 million of free investable assets – was $37.2 trillion in 2006.

The old model of the private merchant banks where the owners began by managing their own family money and branched out into managing others’ wealth is not available to the ‘mass affluent’ – those with £500,000 or so. To get genuinely personal service from one of the private banks, you will need at least £10 million in free assets.

Today at the high street banks you are likely to encounter staff whose only expertise is in ticking boxes and ‘recommending’ an in-house product thrown up by the computer – for which you will likely incur a 5 per cent front-end fee.

One of the biggest players in the UK is Barclays Wealth, which, like many others, is actively looking for new business. But for the vast majority of customers with between £250,000 and £1 million to invest, the wealth management operations of the high street banks are sometimes accused of offering little more than someone to talk to. Barclays private banking clients, for example, are allocated a personal banker who handles up to 100 accounts.