With an estimated US$83.5 trillion in assets to be passed down to the next generation over the next 20 to 25 years, private banks recognise the urgency of capturing the next-gen opportunity, private banking CEOs said at Asian Private Banker’s Hong Kong Summit.

However, understanding the wants and needs of next-gen clients, as well as how to cater to them, remains a challenge for private banks.

“We don’t have the magic recipe. Although wealth transfer is real, knowing who they are, what are their values? What are their expectations? Is the trillion dollar question,” said Arnaud Tellier, CEO of Asia at BNP Paribas Wealth Management (BNP Paribas WM), during the panel session ‘Asia’s wealth horizon – Family offices, next-gen dynamics and game plans for tomorrow’s clientele‘ on Tuesday.

Arnaud Tellier, BNP Paribas Wealth Management

One of the most pressing issues presented by next-generation clients is their want for fewer banking relationships, explained Tellier. While this poses a significant challenge to the private banking industry, Tellier also believes, contrary to prevailing views, that next-generation clients do not necessarily need to be served by next-generation bankers, but appreciate the banking relationships already created by their parents.

“Clearly, there is stability, but we need to earn it. Because, for sure, they (next-generation clients) won’t entertain a group of 15 bankers. They very much prefer a group of four or five bankers, which is going to be really our challenge for the future,” said Tellier.

Teresa Lee, UBP

As wealth is passed down to the second generation, private bankers have been examining ways to enhance touchpoints, as well as gain the trust and loyalty of the second generation, said Teresa Lee, regional head, North Asia, and chief executive Hong Kong at UBP.

“We aim to do three things. First is to provide education beyond financial markets and investment education, on how to empower and how to elevate them,” said Lee, adding the bank also aims to help next-gen clients form networks and meet their investment expectations.

Having an impact

Noting higher education levels than previous generations, David Shick, market head, Greater China Hong Kong, and branch manager Hong Kong at Julius Baer, highlighted that next-gen clients are more focused on creating an impact.

David Shick, Julius Baer

“They’re very savvy about impact investing and what’s going on around the world,” said Shick. “The days where it’s [just] RM and client are over. You need to bring in the specialists because not everyone can handle all the topics themselves.”

This is related to how next-gen clients see wealth as a responsibility, as well as a set of values, objectives, and expectations tied to the family legacy, instead of mere financial assets, according to Tellier.

“This straddles with the topic of family offices, because that’s what all these values can really be wrapped into, if it is properly organised,” Tellier added.

Peter Beske Nielson, partner and global head of wealth at EQT, believes questions on impact investing now need to be faced by asset managers. “That is the mandate that the next-gen is giving you. They expect you to live up to and they will hold you accountable. And if you don’t live up to it, they will vote with their feet and put their money somewhere else.”

Peter Beske Nielsen, EQT

Lee also highlighted how the next generation has a greater interest in private market offerings, differentiating themselves from the previous generation’s tendency to focus on relatively conservative public markets and returns.

“They like to invest with purpose, aligning their values with their interest. There’s a tendency for them to switch from investing in public to private markets,” said Lee. “It could be infrastructure, private credit, and private equity, so that their asset classes are a lot wider than the first-gen.”

Digitalisation underway

Julius Baer is taking a two-pronged approach to digitalisation. On the client level, the bank provides an e-banking suite, while on the relationship manager level, the bank has been using digital investment advisory to leverage artificial intelligence (AI) to enhance services.

“We’re not just looking at the side of the client, because the private banking job is not going to go away, and that’s the bottom line,” said Shick. “AI is not going to replace you, and we are going to use that technology to create and assist in providing higher touch point products and services.”

As for UBP, Lee said its digital plan includes blueprints for online client onboarding with e-signatures and digital client risk profiling features, as well as going paperless for all e-notifications, statements, and contract notes.

“For 2025 and beyond, we are working on rolling out the new online banking system, as well as online tradings. These are the things that we encompass various aspects into our client journey to provide a seamless digital journey to clients,” said Lee.