German private banks are too focused on traditional investment products such as shares, pensions and unit trusts, which for the most part ar...

German private banks are too focused on traditional investment products such as shares, pensions and unit trusts, which for the most part are not geared to the demands of the country’s wealthy, according to a report from the Munster-based consultancy, Zeb/Rolf Schierenbeck Associates. The report said there will be a major transfer of wealth during the next five years in Germany, which local banks need to position themselves to service to a much greater extent than they have so far done. Zeb predicts the number of high net worth individuals in Germany will grow at a compound rate of between 8 to 9 per cent until 2010, with a transfer of wealth through inheritance likely to be as high as €2 trillion ($2.4 trillion). Wealthy individuals in Germany are increasingly changing their relationship with private banks due to poor investment performance and high fees, said the report. “Only an adjustment in the business models of most private banks to incorporate much more of a performance-based model will ensure they retain and grow their business with wealthy private clients on a long-term basis,” said Olaf Scheer, a partner at Zeb and the main author of the study. The report went on to say that private banks must enter into much greater consultation with their clients. They must adapt a “family office” approach to dealing with their clients, although at a lower-cost base. This can be achieved by greater use of technology to support the whole value chain of the client-bank relationship.