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October 4, 2017updated 05 Oct 2017 3:06pm

Smarter Money: private banks and universities

By Oliver Williams

Head of WealthInsight, Oliver Williams, explains why private banks should work closely with leading universities to attract new clients, make strategic introductions and more effectively promote their brands.

This month data from WealthInsight reveals the universities that have the highest number of HNWI alumni. It was no surprise to see Harvard topping the list with a host of Ivy League institutions – and Oxbridge – in its wake.

When it comes to business schools, the story is much the same: Harvard Business School dominates the list, followed by a host of other well-known names such as the Kellogg School of Management at Northwestern University and the University of Pennsylvania’s Wharton School.

This year’s Financial Times Masters in Management Rankings, the first to take into account salary increases, sees the University of St Gallen retain top spot, followed by HEC Paris and IE Business School.

Attracting new clients 

Rather than serving as a shopping list from which private banks can lure graduate talent, these rankings can help wealth managers attract new clients.

After all, WealthInsight’s research also reveals that approximately 93% of today’s HNWI community have some form of higher education, usually a university degree. Only 1.3% dropped out before completing their studies, despite famous examples such as Bill Gates and Mark Zuckerberg quitting Harvard to pursue their billion-dollar dreams.

No matter how many years in an alumnus club a HNWI has clocked, loyalty to these institutions is often lifelong, and lucrative. A previous WealthInsight report showed that nearly 20% of all philanthropic donations from HNWIs go towards academic institutions. Most of these are not out of the blue either – HNWIs often give to their old alma mater, or to their children’s.

University networks

Tapping into these networks can prove lucrative for private banks as well. Knowing the alumni network of a client or contact enables a new approach to prospecting.

Rather than rely on haphazard referrals, more strategic introductions can be sought between one HNWI and another.

At WealthInsight we have carefully mapped alumni networks of HNWIs to help relationship managers navigate these spiralling webs of connections. Seeing who graduated from one class is often surprising.

There are also opportunities here for marketing departments. Alumni magazines have wide circulations among high-brow audiences – think Harvard Business Review.

Studies run by WealthInsight have shown advertising in these magazines to be highly effective among HNWIs, who religiously study every issue.

Next millionaires

Alumni networks may be generous, but it is on campus where the next millionaires are being made. In addition to today’s 18m HNWIs globally, as many as 12,396 HNWIs are created every week, according to WealthInsight data.

Between now and 2020, there will be another 1.8m HNWIs globally, with 73,000 in the UK. These individuals may not be worth $100,000 – or even $100 – today. In fact, a great many of them will currently be students struggling to make ends meet.

Generation Z’s needs

Marketers need to consider the needs of this ‘generation Z’ who are currently enrolling at university.

As well as spending more time online – they are also known as the iGeneration – this age group might require entirely different services from a private bank. Aspiring entrepreneurs will need financing, and future C-levels will stick with a brand with which they are familiar.

Successors to wealth will also be among the generation Z enrolling at these prestigious universities, and they often travel far to do so. The barrier to Ivy League schools is not only brains, but money as well.

Universities in the US have more HNWI alumni living elsewhere in the world than any other, followed closely by the UK. Many business owners and wealthy families outside Europe and North America are eager for their children to have a Western education.

University case studies 

Many private banks are already nurturing these networks by running a succession programmes in league with some of the world’s top universities.

Citi runs an annual Business Families Spring Summit with Harvard Business School. Credit Suisse’s Young Investors Program was developed with the University of St Gallen, and has since been run 28 times in different locations around the world. Coutts has collaborated with the Wharton School in its Coutts Academy.

While each of these programs creates their own ‘succession alumni’ networks, they also serve to spread their brand on campuses where the next top talent is being taught.

With any luck, some of that new talent might also be inspired to work for a private bank or wealth manger. After all, great wealth requires great minds to preserve it, as well as to make it.

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