Should Private Banks change tacks?

First of all, to many of first-generation emerging market business owners, there is no such thing as “private” wealth. Typically, they are heavily involved with the day-to-day running of their company, and will reinvest any spare cash into the business. A recent report we commissioned on high-net-worth business owners in Asia, Africa and the Middle East, confirms this clear tendency to put business before wealth.
Most of the around 60 entrepreneurs we interviewed did not have a strategy for growing their personal wealth. “I’ll think about it when the time is right,” as one of them commented. What was striking about our survey, conducted by Campden Research, was the degree of similarity between the entrepreneurs. Whether in the UAE, Nigeria, India or China, the majority were firmly focussed on the needs of the business, with personal wealth featuring much lower down on the agenda. This is in stark contrast to the West where businesses tend to be older and more established, and the assets of the business and the owner therefore more clearly divided.

The findings suggest that a huge and rapidly growing client segment for private banks – cutting right across emerging markets – cannot necessarily be reached with traditional private wealth management products, or at least not in the first instance. An emerging market entrepreneur is a lot more likely to come to the bank looking for a business loan than a wealth fund.
ou want to bank the owner, bank the business.

However, in our recent study, high-net-worth business owners in Asia, Africa and the Middle East attached a relatively low importance to formal planning for the succession or future strategic agility of their businesses. Some were skeptical about the need for external managers to help their businesses grow. As one high-net-worth family business owner commented, “Family members are more likely than external advisors to care about and nurture the business.”

Source: Qatar Today



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