This publication recent interviewed Sigrid Seibold, a managing director in Accenture’s financial services industries sector, looking at the "perks" that private banks offer and how they should approach the issue.

Editor’s note: This publication recently interviewed Sigrid Seibold, a managing director in Accenture’s financial services industries sector. She has a wealth of experience across financial services domains and has been involved in projects across Western Europe, Asia, Turkey, White Russia and India. She worked for two major banks before joining Accenture in 2006. Seibold recently spoke at a WealthMatters conference in Hong Kong, organised by the publisher of this website. Separately, she spoke to this publication about how banks should or could treat “perks” towards clients from a strategic point of view. (To view a similar article on this topic, click here.)

Can private banks be strategic in the way they offer perks?

We think any perks should be part of the overall client strategy. Usually clients are assessed by banks on a number of criteria such as current life-cycle stage, potentially to further develop wealth of that client, percentage of overall share of wallet etc. The key focus in private banking is creating a unique client experience, which is determined by a number of factors. The interaction with the relationship manager is not only based on transactions, rather than being a trusted advisor in all wealth related aspects. To create trust relationship manager creates various interactions to truly understand its client needs, that include spending time with him outside the Private banks office space but rather in a neutral or client environment. The various perks should be strategic to support that objective and need to be used smartly as they increase the cost-to-serve. 

Brand Value should be communicated stringently through those perks (examples matching brand perception and linked events):

-          UBS: F1 night race and advisory excellence conferences

-          SocGen: French Film festival

-          BNPP: Sporting events (Tennis)

-          Boutique Swiss private banks tend to focus on more cultural events (e.g.: Photography, art exhibitions )

It is also important to create events where clients with similar interest/needs can meet each other (e.g: an entrepreneur looking for capital to meet venture capitalist in technology sector, clients that share passion of wine, etc.)

Perks can help to differentiate in a highly competitive market if used strategically and authentic to the brand value.

Do clients value the perks enough to spend large amount of money on them?
Given that average Asian client has its assets spread across multiple private banks he will be courted by various relationship managers and enjoys a variety of perks. A trusted relationship is key and the return expectation of the Asian wealth clients are extremely high compared to European or North American Investors. So performance, price transparency and trusted relationship will be key to determining how many assets a client moves to a financial institution. 

The individual decision depends on the individual buying and decision making behaviours, the relation between perks perceived as appreciation by the bank and tool/medium to be perceived elevated compared to wealthy peers is another dimension to consider. Here it really depends how well does a bank understand the individual client decision making triggers and where and when to use the perks in order to influence actual asset inflow.

How can banks assess whether it is “worth it”?
Banks evaluate their relationship managers performance on various factors such as the increase of assets under management, return rations per asset class, net new money etc. There is also the cost dimension – how much is the cost to serve this client and compared to peer group and in relation to the return delivered. Given the efficiency pressure the wealth management market is experiencing the cost dimension can and will not be ignored by banks.

We believe that all direct/indirect costs should be linked to clients and full P&L done to make sure that private banks know on which clients the invested perks bring a return or might also consider changing ‘types’ of perks to certain clients on which the return is not realised.

Do you think this ‘softer’ side of private banking strengthens client – relationship manager relationships? In what way?
It definitely does as it provides a unique way to connect with the client and understand him/herself better as a person and the specific needs. It also creates a better link through joint experiences outside the usual office environment. So playing Golf and understanding what is on the clients mind but also the other way around for the client to understand which value the relationship manager can truly bring to his unique client situation is extremely valuable.

In that aspect in it important to differentiate at what point in the emerging or maturing relationship perks are used and how they are building up. It will be more and more challenging to create exciting and surprising perks to re-create the unique client experience. We believe that banks need to go new ways in using behavioural analytics to understand how to individually create these experiences to ensure a long-term client connection.

Do these tactics work in terms of winning new business or retaining/meeting the expectations of existing clients?
The return of these perks can be clearly measured on a timely scale and the net new money inflow. Recent surveys under clients in APAC have shown that not even 50 per cent of all clients in the high net worth segment feel that their needs are clearly understood and responded to. If that first step is not correctly done the used perks will be not very targeted and the return mediocre at best. 

Can these exclusive events be harmful to the private banks’ other clients in the way that only a select few are invited?
Usually the events are very private and exclusive and there is also a clear distinction between the various clients segments. We would think that as usually in human behavior something, which is rare, seems to be more desirable. In consequence any knowledge about the perks on the high net worth individual client level would seem to be desirable for the affluent client close to the move in the next segment.

What are the general pros and cons of a private bank investing resources in these “extras” to impress clients?
A `Catch 22’ situation is that if you over spend on them, they will feel that private banks are over-charging them for their services; if perks are a strategic element of the overall client experience it makes absolute sense to have experts in the field finding exactly the right triggers to respond for any special interest the banks clients needs to have. But again client need analysis is the key and usually the banks are not using the full potential to get to know their client (changing) needs.  

Final points? 
Transparency in pricing is key for wealth clients and here especially the first generation entrepreneurial wealth, which in consequence means if the perks are somewhat included in the fees (which they must if you look at full costs to serve) then there may be clients who rather exclude the perks and pay for the plain advisory service only (as they can organize their entertainment via other sources or themselves). Given that on top of the Asian behavioural value chart is status and recognition – any event that will demonstrate the very unique individual value of the client will be perceived positively.