Ultra high net worth clients, often more demanding customers than less wealthy persons, have become more willing to fire wealth managers after the 2008 financial panic and possibly as many are younger than some traditional peers, an annual survey by Société Générale Private Banking and Forbes has found.

The survey, taken from 1, 200 UHNW individuals in 12 countries – with a minimum net worth each of $1 billion apart from those in Singapore, China and India – showed that the balance of global wealth is shifting eastwards with average ages of the super-rich getting younger, as fast-growing developing economies such as Brazil become bigger wealth drivers.

The survey also conducted 17 interviews with UHNW individuals with at least $60 million of investable wealth. The average age of an UHNW individual in Russia is 49 and 50 in China, while in the US, the average age is 66, and 74 in SocGen’s domestic market of France, the report showed.

The economic turmoil may have made clients more willing to reconsider their options, the report said.

“It’s hard to say whether it is attributable to the post-downturn hangover or simply a matter of it being an opportunity to shake things up, but a number of UHNW individuals indicated they are assessing new advisor relationships, or looking to restructure their existing investment advisor roster,” the report said.

SocGen’s private bank has a high concentration towards the UHNW end of the wealth spectrum. Aiming to reach €150 billion (around $211.7 billion) in client assets by 2015, the private bank oversees €84.2 billion of assets, of which 38 per cent are held by UHNW individuals. Of its six international client lines, 84 per cent of these lines’ assets are in the UHNW space. (The international client lines are Russians, Arabs, Indians, International French, Latin Americans and financial intermediaries).

“We can see in the past that we had to develop all expertise in all areas in a very strong way. If you are not in [this segment], then you are totally out,” Daniel Truchi, global chief executive at the private bank, told journalists at the release of the report.

Sustaining such growth in AuM will come from organic growth, particularly in emerging market economies, although acquisitions will add to this if opportunities arise, Truchi said.

Demands

Such clients are typically more demanding and more expensive to serve than high net worth clients, given the scope of services they require, ranging from multiple investments, spread of properties and interests. At the level of family offices, such clients can often obtain institutional-level pricing for products not open to less wealthy clients, raising the issue of how profitable the UHNW segment is.

“I agree that there is a sweet spot [in business terms] at lower levels [of wealth] than maybe at this [UHNW] level,” said Eric Barrett, chief executive at Société Générale Private Banking Hambros, the UK arm of the private bank. However, he cautioned that the level and quality of business in the UHNW space can be strong and rewarding to a bank.

Truchi, meanwhile, added that price competition can be more intense with institutional-level business but the total volumes of business offset this. “The spreads can be possibly narrower but the volumes are probably larger,” he said.

Among other highlights of the report, it noted that the vast majority of “global citizens” live and hold citizenship in the same country, with the highest – 100 per cent – being in Mexico and the Middle East, followed by the US, at 97 per cent. In the latter case, the worldwide system of US taxation is said to deter citizens from living abroad for extended periods.

The report showed that Middle East super-rich are more likely (74 per cent) to be involved in politics than for people from other areas, with US UHNW individuals (52 per cent) in second place.

More than 40 per cent of UHNW individuals fund their own charitable foundation or run a charitable foundation started or maintained by family members.

Family links vary considerably. Indian families (58 per cent) are the most likely to have family members in a business, with Hong Kong (55 per cent), Middle East (53 per cent) and France (50 per cent) also figuring highly.