A wealth of advice for the wealthyCompetition is fierce among domestic financial companies to locate and retain high-net-worth customers. With short-term interest rates falling to just above 3 percent this year and the stock market still an object of skepticism, the number of investors looking for help managing their wealth is growing.
The Bank of Korea recently announced that the number of people with savings of more than 500 million won ($425,000) increased 8 percent this year, bringing the total to just above 60,000.
The trend has banks strengthening their private banking teams and setting up wealth management centers for customers with cumulative assets of at least 1 billion won.
Private bankers, who as a rule of thumb will not take on customers with savings of less than 100 million won, offer help with taxes in addition to a hand with investing in real estate, debt instruments, certificates of deposit, insurance and other investment vehicles.
Investment and tax advice are not the only special services private banks in Korea offer. Hana Bank’s private banking unit, which employs about 120 staff to meet the needs of its 35,000 or so clients, arranges gatherings of customers with similar backgrounds. The bank will even arrange blind dates for their customers’ unmarried children.
Recently, Hana Bank opened a wealth management center employing 30 professionals who provide specialized services for customers looking for comprehensive financial advice.
Korea Exchange Bank opened a wealth management center at the start of this year. Employees of the center were trained in formal etiquette; most have extensive backgrounds in serving well-heeled clients.
In addition to providing banking services, Korea Exchange Bank said it hopes to use its extensive network of overseas branches to offer counselling services to customers seeking to study abroad, invest overseas or immigrate.
Kookmin Bank is centering its private banking operations around the Gangnam area of Seoul, but the bank is planning to branch out in the second half of this year, opening private banking centers in as many as 10 other locations.
Woori Bank and Shinhan Bank, whose parent company, Shinhan Financial Group, recently acquired Chohung Bank, seem to be shying away from offering comprehensive private banking for their clients. While the banks have sought to attract wealthy customers seeking management of large real estate portfolios, they are not delving into matchmaking or offering many services beyond traditional banking.
Securities brokers are also stepping up to the challenge of meeting their high-net-worth clients’ needs for comprehensive wealth management services. Most brokerage houses have their own private banking brands catering to clients with a minimum of 100 billion won in assets. Daewoo Securities Co., Ltd. is known for its Caesar’s Class, Samsung Securities Co. for its Fn Honors and LG Investment & Securities Co., Ltd. for its GoldNut members, all of which offer tax and legal advice along with investment services.
The fact that these companies deal with securities does not mean a client’s assessments are poured into stocks. A wealth management portfolio, which might include bonds, foreign exchange investments, annuities, derivatives or any number of investment vehicles, is tailored to meet the financial goals of the individual.
The brokerage houses can also facilitate real estate investments, sell insurance, offer advice on studying abroad ― even arrange a tee time at a golf club.
Daewoo Securities, like most of the other brokerages, provides perks for its Ceasar’s Class clients like special deals on golf and hotel rooms. It also arranges jewelry shows and wine samplings for interested customers.
Insurance companies have recently begun comprehensive financial consulting services with many of the characteristics of private banks. Kyobo Life Insurance Co., Ltd. has been offering consulting on retirement, real estate investments, tax affairs, inheritance programs and other services for well-off clients since May 2002.
Last October, Samsung Life followed Kyobo’s lead, setting up a financial planning center for wealthy clients.
The insurers analyze a customer’s financial needs from the present until his death and determine the best levels of asset allocation for each life stage. They also offer extensive estate planning services and advice on how a customer can minimize his tax burden now, in the future and for his heirs.
by Ju Jeon-wan