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For wealth managers seeking a competitive edge reaching high net-worth (HNW) entrepreneurs, the answer might be better inter-departmental collaboration, according to a recent study by GlobalData, a London, U.K.-based data and analytics company.

Out of the 10.5 million HNW individuals worldwide, approximately 46% are entrepreneurs, making them a large yet competitive market, the report says.

“The sheer size of the market has also given rise to fierce competition with the vast majority of wealth managers operating dedicated programs for entrepreneurs,” says Heike van den Hoevel, wealth management senior analyst at GlobalData, in a statement. “Consequently, providers have to up their game when reaching out to this segment to beat the competition.”

Although the majority of wealth managers are acquiring HNW entrepreneurs through external client referrals and contacts (35.7%), the report reveals an underused approach: internal referrals within an investment bank. Currently, only 7.8% of wealth managers are connecting with clients this way.

“Referrals from ones investment or banking business department do not only provide an important source of new business, but allow wealth managers to service clients more effectively, and increase fee income by leveraging cross-selling opportunities,” van den Hoevel says.

“Wealth managers need to ensure that frontline staff has a thorough understanding of the other unit’s products and value propositions,” she adds.

“At the same time, well-defined incentive structures are needed to foster a culture that promotes interdepartmental collaboration and encourages staff to share customer information. Providers that are able to leverage their wealth management as well as investment and business capabilities will be well placed to generate additional business through referrals and boost their bottom line thanks to increased product sales.”

GlobalData reveals that most HNW entrepreneurial clients are acquired through acquisition channels in the following order:

  • Client referrals and contacts 35.7%
  • External referrals from partner companies 14.5%
  • Relationship managers’ own contacts 13.4%
  • Internal referrals: retail bank 12.6%
  • Internal referrals investment bank 7.8%
  • Organized client events 5.2%
  • Third party events 3.3%
  • Cold calling 3.0%
  • Partnerships: trade/industry/government bodies 2.4%
  • Other 2.2%