After a week in which the growth in the number of millionaires was reported to be booming in many parts of the world, the private banking industry would appear never to have been in healthier shape. So it comes as a jolt to read surveys showing deep client dissatisfaction with the quality of service they get from private banks.

Last week, Family Bhive, a website that  connects high net worth families and their advisors, said that more than 40 per cent of families are thinking of switching their banks and half are thinking of firing their investment managers.

If this view is widespread, then private banks, which have enjoyed the recent rise in the number of high net worth individuals worldwide, could be badly exposed to any slowdown in global growth – a risk that cannot be ruled out in the current uncertain economic climate. As Caroline Garnham, a senior lawyer for LG (formerly Lawrence Graham) and founder of Family Bhive puts it, this is not good enough.

“It is absolutely staggering. They [private banks] need to have more understanding of the risk tolerance so that clients feel comfortable with their service. If you compare private banks with financial advisors, IFAs go out to clients and find out what their concerns are; they go to their homes and talk to them. From my experience, I used to use a bank that only used to send out the odd letter,” she told WealthBriefing.

“We want to continue doing this survey. The whole point of it is to demand greater transparency in the industry and greater quality of service. It is easy for people to trust an investment manager when they are making good money but in tougher times, what people need is someone to hold their hand,” she said.

The survey, as WealthBriefing and other media reported last week, found that 90 per cent of high net worth families that use an independent financial advisor said they were satisfied with the service and not contemplating a change. Family Bhive surveyed more than 300 UK people with a minimum net worth of £5 million.

The report, while it was carried out among mostly UK-based individuals rather than from around the world, is suggestive that the industry needs to sharpen up its act radically to retain as well as capture new business. 

There are the faintest glimmers of warnings already that the industry may face a tougher environment, at least in some of the more mature economies. Although Merrill Lynch, the global bank, and Capgemini, the consultants, said in their annual report last week that the number of HNW individuals rose last year from 2006, the rate was actually slower than in the previous year. Meanwhile, Scorpio Partnership, the consultancy and research firm, also showed that in some areas, there has been a slight deceleration of growth, although the medium term outlook remains strong.

A continuing issue, as Scorpio Partnership has pointed out in the past, for example, is that wealth managers have so far only managed to run no more than about a third – exact figures are extremely hard to pin down – of the assets held by millionaires. That “share of wallet” will be unlikely to increase, Ms Garnham argues, until the private banking industry delivers consistent top-notch service to justify its fees.