Why are family offices, private banks, and concierge companies of interest to luxury brands?
In the last ten years, there’s been a huge rise in wealth amongst the wealthy. If we break this down by wealth category:
- UHNWI – 1,329 additional individuals, that’s nearly a 100% increase
- HNWI – 8 million additional individuals – a 30% increase
- Wealthy – around a 67% increase in the number of individuals in this category
This acceleration of wealth has led to an increase in support services to help structure and maintain this sector as well as make them more wealthy and comfortable.
This has given an expansion to different service providers – family office, wealth management and private banks, and concierge services.
These services provide ease to the UHNW and HNW or families so they can enjoy their lives without worrying about some of the details needed in running a large estate. Or indeed, to give them access to exclusivity and ‘money can’t buy’ experiences.
Why is this interesting? Because we often look at marketing to the luxury sector through the lens of what we know about the direct wealthy individuals: their hobbies, interests, leisure activities, and locations to name a few.
But we must think smarter about these different cohorts. As their wealth increases, as does their desire for greater anonymity. This often means they are one step removed from our marketing efforts, instead relying on their support team to make decisions on their behalf.
So, who are these support teams?
Within the HNW and UHNW categories, you’ll find two main types of support team: private banks and family offices.
Private banks are typically owned and operated by a financial institution. As such, a family office and a private bank are both wealth management firms, but there are some key differences between the two.
- A family office is a private wealth management firm that provides a wide range of financial and non-financial services to Ultra High Net Worth (UHNW) families. UHNW families are typically defined as those with a net worth of at least $30 million.
- Family offices are typically owned and operated by the family whose wealth they manage.
- Family offices provide a variety of services, including investment management, estate planning, tax planning, philanthropic planning, and lifestyle management.
- A private bank is a financial institution that provides a variety of banking and investment services to High Net Worth (HNW) individuals and families. It’s a commercial bank or investment bank. HNW individuals and families are typically defined as those with a net worth of at least $1 million.
- Private banks offer a variety of services, including investment management, estate planning, tax planning, and lending.
What are the key differences between a family office and private bank?
- Client base: Family offices typically serve UHNW families, while private banks serve HNW individuals and families.
- Ownership: Family offices are typically owned and operated by the family whose wealth they manage, while private banks are typically owned and operated by a financial institution.
- Services: Family offices offer a wider range of services than private banks, including non-financial services, such as lifestyle management.
However, both family office and private banks offer concierge services, either directly to their clients or through specialist companies such as Townhouse, which provide high-end, bespoke services.
Marketing your luxury brand to HNW/UHNW individuals
Where traditional marketing campaigns promote luxury goods and services directly to the consumer, we must also consider how to connect your luxury brand with the wider support team.
- Overall there are around 10,000 private banks globally
- There are around 1,500 family offices
- While we don’t have hard numbers on concierge companies, we know there are many thousands of them throughout Europe and North America
Why is this important? It’s simple: trust
If you can become a preferred supplier to these intermediaries, then they’ll help to promote your services directly to their clients. For example, if an UHNW family is in the market for a superyacht, they inform their family office that this is the investment they’d like to make. The family office then takes the lead vetting several suppliers and setting up meetings for their client.
This process keeps the anonymity of the individual, prevents gauche conversations around money and budgets, helps to develop exclusivity, and builds long-term relationships with key people and suppliers.
As for marketing, understanding the mechanics of these crucial support services is vital. We know that they’re ‘in market’ to support their clients goals, so building luxury, high-end marketing campaigns that meet the needs of these specific cohorts allows us to offer services that appeal directly to this audience.
If you would like to know more about marketing to private banks, family offices or concierge service providers then please get in touch.