7987532186_752ccfeec8_o“Let me tell you about the very rich,” F. Scott Fitzgerald once proclaimed to his friend Ernest Hemingway, “they are very different from you and me.” Hemingway, in his celebrated de-facto manner of speech, is said to have simply replied with: “Yes, they have more money.”

These two literary geniuses were both right. Yes, the uber-wealthy are different to other wealth segments, and yes, a contributing reason to this is that shining (and lengthy) number that forms their total net worth.

But it goes far beyond that.  Wealth is not a broad-brush category. High-net-worth investors are not looking to work with institutions who believe a ‘one size fits all’ approach will do. Because whilst multi-millionaires share common characteristics, each individual also has a unique set of needs.

Since 2011, we have witnessed an average annual 8.2% increase in the total high net worth (HNW) market size. As assets under management continue to shoot up, private banks and wealth firms are having to take a good, long, hard look at themselves in the mirror and examine the ways in which they could and should refine their strategic targeting, in order to take advantage of the growing potential.

Whilst the industry has long considered basic client segmentation as a foundation for marketing initiatives, it is only recently that we have begun witnessing a more impactful shift – firms are now moving away from the use of simple labels such as gender, age, geography and wealth level. They are beginning to identify personalities amongst these larger segments. Client profiling is undergoing a serious transformation as specific behavioural patterns such as knowledge of investments, attitude towards products, or responses to their wealth management experiences are now increasingly taken into consideration.

Understanding behaviours adds a dimension that gives a competitive edge to any operator. As a result, certain wealth managers have begun building mobile apps for clients to pre-model different investment scenarios, encouraging them to measure their reaction to different potential outcomes. Others encourage behavioural coaching and training for relationship managers so as to help them understand the different biases that influence the decision-making of clients.

In fact, the theme of behavioural finance has now attracted ‘hot topic’ status, as more institutions realise that the development of targeted marketing requires a re-structure from the inside out [Figure 1]. Regulators are also reinforcing the growing interest in behavioural finance as they have made it compulsory for firms to evidence how the recommendations they deliver to clients are suitable to the financial profile of each individual.

Figure 1: Internal wealth firms’ expertise areas

Q: To what extent do you believe these expertise areas should be incorporated into [training]?

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Source: Scorpio Partnership and CFA Institute, 2017


Notably, this race to identify client personalities and their various characteristics, preferences and patterns of consumption, has also led to a development of numerous psychometric tests – such as the Wealth Dynamics Test – aimed at supporting these emerging profiling systems.

Here at Scorpio Partnership, we have also designed six client profiles with distinct behaviours based on their wealth needs and expectations from wealth managers [Figure 2]. These are used as evidential cases to help highlight these profiles’ strategic importance for businesses in a growth mind-set. They are increasingly being hard-coded into business analytics for commercial gain.

Figure 2: Building a business through a behavioural lens is the next dimension of wealth management

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What we can see in the industry is that firms are now moving in the direction of personality profiling as a method of developing a more effective offering for the client of the future. The question then, is: if we do get to know the personality of our customers better, will we actually do more business with them? The answer is yes.

As they say, knowledge is power, but knowing your client is even more powerful in the world of wealth. Individuals’ financial decisions and objectives are invariably influenced and coloured by earlier life experiences, family values, philosophical convictions, and even religious faith. Not taking the full spectrum of a client’s life into account when working with them is detrimental to future potential.


Source: Vanguard, Know Your Client

In a nutshell – the HNW market is growing, and in order to capitalise on this, firms will need to recalibrate their views and investments towards behavioural segmentation strategy.  The industry will need to begin shifting gears to drive growth through client engagement, integrating an analytical and deeper comprehension of behavioural disposition.


Thought for the week:

“The golden rule for every business (wo)man is this: ‘Put yourself in your customer’s place’.” – Orison Swett Marden

News from the world of wealth:

HSBC says it might move fewer than 1000 jobs to Paris on Brexit – Reuters

Global Wealth Management AUM Set To Double by 2025 –

MAS unveils transformation roadmap for financial services – Private Banker International

Thiam Escapes Siege as Credit Suisse Wealth Drive Quickens – Bloomberg                                


HubertAuthor: Hubert Brown, Manager at Scorpio Partnership.                    

Expertise: Hubert divides his time between the running of client engagement projects and the analytical side of HNW insight work. Recently, he has been actively involved with the creation of Scorpio’s global private banking benchmark study.

Background: Hubert holds a Bachelor’s degree in Business and Financial Economics. He has experienced a breadth of client project work since joining over four years ago.





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