High end planning

The high net-worth client market is growing globally at 10 per cent per annum and is now worth $US23 trillion, says Macquarie Bank head of private investment banking Tony Bates.

The high net-worth client market is growing globally at 10 per cent per annum and is now worth $US23 trillion, says Macquarie Bank head of private investment banking Tony Bates.

"The new money is growing faster than inherited wealth," he says. "It is a mar-ket where the people have high-risk profiles as performance is an increasingly important value."

In Australia, private banking operations where lucky to get $1 in every $10, Bates says. "Today private banking is getting $1 in every $5."

"This growth in wealth is presenting financial planners with opportunities in a segment where nobody owns the market," Bates says.

Macquarie's private banking clients tend to own $10 million and above, but Bates says brokers, accountants and fund managers are all competing in the market.

According to a survey conducted by Macquarie, the high-net worth segment of Aus-tralian families is 1 per cent, however, the total wealth in the segment is worth $284 billion.

This compares to the mass market, which is 95 per cent of households which holds $1,205 billion of the country's wealth.

Bates says the demands of the high-worth client have shifted in recent years.

In the past a client would want to protect their wealth whereas today they want to create wealth.

"In the past the client would want a leather-bound report, today they want the information online," he says.

"These clients want a tailored solution to specific financial requirements and the advisers must be available 24 hours a day."

Technology is playing a role as it allows the adviser to discover more about their client which, in turn, helps them meet the demanding service needs to keep the business.

The threat for the sector is coming from on-line services which these sophisti-cated clients are very capable of using, Bates says.

He expects a major player to launch an on-line private banking service shortly in Australia. "New players in these sectors are moving faster than existing players and that is making it difficult," he says.

"The first on-line service in Australia will be very successful and they will get customers very quickly."

However, he warns, it will be expensive and the company that launches the serv-ice will have to spend $4 on branding for every $1 it spends on technology.