The proportion of high-net-worth individuals in Australia is on the rise, and one major bank is eyeing them through its private banking division.
NAB Private customer executive Jason Murray said that private banking was meeting the needs of the growing market of high-net-worth individuals.
“We are one of the fastest growing parts of the bank. Private banking is a key growth area for the bank, not surprisingly given the stats,” he said.
The statistics provided by NAB found that there were over 435,000 high-net-worth individuals in Australia who combined were responsible for $1,720 billion in investible assets.
A high-net-worth individual was defined as having over $1 million in investible assets. Of those individuals only 7 per cent had a private banker.
Mr Murray said that Australia was one of the wealthiest countries in the world and the high-net-worth individuals only had room to grow.
“Per capita Australia is one of the wealthiest countries in the world. We are going through the biggest inter-generational wealth transfer in this country’s history and the high-net-wealth segment of the economy is the fastest growing in the country,” he said.
He also said that private banking in Australia was woefully under-utilised when compared with other OECD countries.
“Less than 20 per cent of high-net-wealth individuals in this country actually have a private banker, compared to more than 70 per cent in the UK,” he said.
The research by Investment Trends on behalf of NAB found that 36 per cent of individuals invested to build a sustainable income stream, followed by 34 per cent who wanted to achieve a balance of capital growth and risk management.
“Our high-net-wealth customers are focused on two things: preserving their wealth and building income. They are looking for ways to get yield or returns on their funds,” Mr Murray said.
NAB was well positioned to take over the private banking space as there was almost no competition in the space, said Mr Murray.
“I wish we had more competitors in private banking. From an adviser point of view, of the big ones, you only really have Morgan Stanley, Credit Suisse, JP Morgan; most have left the market. Its left private banking in the hands of only the four banks really,” he said.
Mr Murray said that banking, like a lot of industries, is undergoing a major transformation and the banks would soon enter a period of greater advice.
“There is a real shake up of the industry going on at the moment. I think we will enter an era, as exists in other countries around the world, of a much greater predominance of advice for high-net-wealth individuals and for those that want to do it [themselves] it will be a more structured portfolios of diversified assets,” he said.
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