AP Private | March 2023
In 2022, Private Banking reached €950 billion, with +11% of assets under management since 2016 – this confirms that the business model based on financial advisors has been generating a feeling of trust in Italian savers and families (+2% since 2016).
Projections confirm this positive trend: they predict an annual increase of 6,8% by 2024 – as compared to 2,7% of retail professionals – reaching €1.084 billion.
Private banking is considered the jewel in the crown of financial consultancy, which is an increasingly successful industry.
There are, however, some challenges ahead. The most important are: 1) the ability to attract the best private bankers; 2) the generational passage of wealth, together with the connected issue of insurance; 3) the issue of inducements.
Thus, the ability to centre the business model around the figure of the private banker is essential for the success of asset management, a business based on people and trust.
Empathy, shared goals and trust between clients and bankers, as well as between bankers and management, are key requirements. Without them, private banking services and digital platforms would be worthless.
Moreover, according to Eurostat, the number of Europeans over 65 is expected to increase by 40% in less than twenty years.
A longer life expectancy will result in the coexistence between different generations. Thus, private bankers will be required to communicate adequately with both their clients and their children.
In this sense, there are two key elements: a) digital innovation, which would make it possible to open the dialogue with the younger generation in good time; b) the key role of insurance within asset management as a whole.
Trusts, escrows and family pacts are certainly good options. However, at the heart of a successful generational passage are insurance consultancy and the protection of key people, tangible assets (real estate, company shares, illiquid goods) and intangible assets (patents and intellectual property) in the hands of Private and HNW clients.
For this reason, financial networks bringing together asset management and insurance will probably have a better chance.
Italy has the most underinsured people of the Eurozone. This also applies to the most affluent people, private clients and HNWIs. Thus, the country’s potential is huge.
Last but not least, inducements and the proposal to remove them by the Irish European Commissioner McGuinness.
European bureaucracy takes a long time. However, many consider that the revision of the business model will lead to the relaunch of asset management and insurance.
In light of this, banks undoubtedly attract the best financial professionals and the banks driven by insurance and investing in digital innovation will have a competitive advantage.
In this sense, it is good to see that Zurich Bank, the last born among the Italian banks, is adhering to these principles.