New research suggests that client referrals are the top way to find new HNW clients with 35.7% sourced through this channel globally.

Wealth managers targeting HNW entrepreneur clients should also foster inter-departmental collaboration to locate potential clients, says data and analytics company GlobalData which carried out the research.

According to the company’s report, more than one third (35.7%) of HNW entrepreneurs have been sourced through client referrals, making it the “single most important channel of acquisition” globally.

While this means that generating positive word of mouth is paramount to be able to source client contacts, wealth managers should broaden their focus when reaching out to entrepreneurs, says Global Data which works with 4,000 of the world’s largest companies. 

Reportedly, out of the 10.5m HNW individuals across the globe, 4.8 million (46%) are entrepreneurs, making them an attractively large but competitive target market.

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

The company’s proprietary Global Wealth Managers Survey reveals that just 7.8% of HNW entrepreneur clients have been sourced through investment banking referrals.

Mr van den Hoevel said: “Referrals from one’s investment or business banking 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.

“Wealth managers need to ensure that frontline staff have a thorough understanding of the other unit’s product and value propositions. 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.”