What's important to high-net-worth clients when selecting a private bank and who exactly are they loyal to? A study by LGT provides answers.
«For the clients surveyed, financial stability is the most important characteristic of a bank – and this criterion is very well met by the respective primary banks», says Julia Bertsch (pictured below) of LGT. She is responsible for market research projects at Liechtenstein-based LGT and provided support for this year’s LGT Private Banking Report about the investment behavior of high-net-worth clients.
She also mentions two additional characteristics that are important to clients when it comes to their bank: the expertise of the relationship manager and a good price-performance ratio.
And how do the banks perform in these areas? «Clients are satisfied with the level of expertise of their relationship managers. But there still appears to be room for improvement in terms of the price-performance ratio,» Bertsch says.
Traits Attributable to Banks
More Fine-Tuning Needed
This means that banks need some fine-tuning in terms of their offering and prices – especially because according to the study, an above-average return with a good price-performance ratio is by far the most important factor for client loyalty (see Figure 2).
The satisfaction with returns and the good reputation of the bank are also relevant factors. When it comes to client loyalty to the people, however, how well the relationship manager understands the individual needs of the client plays the biggest role. A friendly personality and the professional expertise of the relationship manager rank slightly behind this.
«According to our study, an understanding relationship manager, above-average returns and a good price-performance ratio are the key drivers for success in terms of client loyalty,» concludes Bertsch.
Driver Model for Loyalty to Banks and Relationship Managers
Banks vs Relationship Managers
So where do clients’ loyalty tend to lie – with the bank or with the relationship manager? According to the study, clients tend to feel more attached to the bank than to the banker (see Figure 2, above).
«This puts into question the tactics pursued by many banks that attempt to gain new clients through the acquisition of relationship managers,» says Bertsch.
Switzerland on Top – Austria Mediocre
The study also examines how the investors assess the individual financial centers: while the Austrian respondents tend to consider their financial center as mediocre, they give the Swiss financial center very good marks (see Figure 3 above).
The same result can be seen for Germany: although German private banking clients view their own financial center as significantly better that how the Austrians view their respective financial center, they also give the Swiss financial center an even higher rating.
According to the LGT Private Banking Report, the majority of German and Austrian private investors could also imagine investing their assets in Switzerland – a very pleasing result for the Swiss financial center.
Julia Bertsch studied strategic management at Leopold-Franzens-Universität in Innsbruck, Austria. After a period abroad spent in London, she completed LGT’s Graduate Program in marketing and communications, where she is now responsible for implementing and managing a broad range of market research projects.
The LGT Private Banking Report 2018 was published in June. The survey has been conducted on behalf of LGT every two years since 2010 with the objective of gaining important insights into the investment behavior and the attitudes of private banking clients.
Around 360 high-net-worth private individuals with disposable investment capital of over 500,000 euros or over 900,000 Swiss francs are surveyed to this end. The surveys are conducted by renowned market research institutions. The author of this representative scientific study is Professor Teodoro D. Cocca of Johannes Kepler University Linz.
