Datamonitor report illustrates HNW client trends for 2002

A staff reporter 12 February 2002

Datamonitor report illustrates HNW client trends for 2002

Datamonitor's latest report, 'UK High Net-Worth Customers 2002' has found the number of millionaires in the UK fell 1.4 per cent from 69,600 to 68,700 between 2000 and 2001, but the ultra high net-worth have not been affected. The decrease was generally due to the falling stock market, particularly the tech market. Muslims are another new HNW sector in the UK, and Datamontior predicts they are set to become one of the next main customer target groups. Datamontior estimates there are 5,400 HNW muslims in the UK, with potential liquid assets of £3.6bn. The market for Islamic (Sharia-compliant) finance in the UK is set to grow hugely, said Nicholas Stephens, Datamonitor global wealth analyst, and the report's author. HSBC is in a strong position with this market, because of its HSBC Amanah Finance, but other banks are set to follow suit, Stephens adds. The report also found HNWs are preferring to keep their money onshore, as UK taxes and the constraints of tying up money offshore mean offshore investing may harm performance. A global crusade against international money laundering and an increase in wealth managers onshore means HNWs are more likely to keep their money in the UK. Another growth area will be tax breaks for philanthropic donations and shares to charities, the report said. Advertising will also become a more common feature of UK private banking as digital TV means more sectional interests can be catered for. As competition increases, UK banks will increasingly echo the direct advertising strategies of their US counterparts, Stephens wrote. Coutts, the UK private bank, has already launched an advertising campaign in the press. Stephens's report states private banks do not effectively service millionaires outside London. Many private banks need to relocate themselves to where their customers are, because of the size of the assets involved, the complexity of the investments and the role of personalised serviced in the relationship. But UK financial institutions, private bank Coutts, and private asset manager Rathbones, told Private Client Management they disagree with Stephens. "Coutts has 15 regional offices outside London, and with large client bases. We opened four offices last year alone. Our aim is to bring our services closer to our clients, and we take our clients very seriously. So to state that private banks do not effectively service millionaires outside London is not our view," a spokeswoman for Coutts said. "I don't think it's true that HNW clients are not catered for properly. We have eight UK offices, and even though it's just as easy to run a fund regardless of where you are, some people like to go local to feel the contact. Some customers are more territorial too. Many of our Scottish clients, for example want to go to Edinburgh, not London for their financial services. It's good marketing to have regional offices, and good for growth," a spokesman for Rathbones opined. Stephens agrees that Coutts is "extremely well-positioned" in the UK. "The report highlights this, but many international firms have poor private banking presences outside London. Citibank, for example, has an office in London, and one in Edinburgh,and Deutsche Bank doesn't have anything outside London. But if you examine that not all HNW clients are in London, then it begins to look very strange that many banks offer services in London only," he told Private Client Management.

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