Reaching Wealth's Upstarts

By Julie Monahan

To reach the young and affluent, marketing campaigns must speak their language and identify with their goals.

They're young, wealthy and have a different outlook. And they are taxing the ingenuity of bank marketers, who must craft new messages to reach an affluent population that doesn't fit the old stereotypes. Who will win their business?

It's not a slam-dunk for banks, which traditionally pitched their private banking and wealth management services to wealthy heirs or affluent retirees, typically with advertising images of older couples enjoying a life of leisure. These ads won't work with today's new class of younger millionaires, who are more likely than not to still be strongly engaged in their careers and pursuing even greater returns.

The picture for wealth's upstarts is more complicated than for people in the wealthy heir/affluent retiree category, where preservation of capital is a core objective. Though the younger affluent also wish to preserve their wealth, they often have the additional goal of continuing to grow it, even aggressively. The issues for entrepreneurs can be further complicated by the bundling of personal and business interests, with all the special tax and inheritance planning needs such situations entail.

Competitive pressures heighten the urgency of crafting the right message. With their well-established trust and private banking units, banks have long been formidable players in the affluent market. But now they're increasingly squaring off against nonbank brokerage, mutual fund and money management firms. Business once taken for granted must now be earned.

Bank marketers are meeting the challenge with a new breed of advertising. Campaigns now feature younger models in workplace settings and scenes from family life, rather than the typical private-bank image of retirees enjoying life on a yacht or a golf course. Brochures and print ads feature young executives leading a meeting, backpackers leaping between boulders and thirtysomething CEOs posed next to their BMWs. A recent image from Bank of New York Co. Inc. depicts a young father walking along a country road with his child. The tagline: "You've built wealth. But that's just the beginning. What now?"

The choice of media is shifting as well. Advertisements today are just as likely to turn up in copies of Red Herring and Fast Company — magazines that cover the New Economy — as in Barron's or the Wall Street Journal. Event marketing is shifting its focus as well. Instead of a night at the opera, J.P. Morgan & Co. (now part of New York-based J.P. Morgan Chase & Co.) last year sponsored a robotics exhibit at the Tech Museum of Innovation in San Jose, Calif.

Nimble marketing is a necessity in today's environment. Wealth management experts say the affluent market is fluid right now and customer relationships are up for grabs. Unlike wealthy heirs, the new millionaires are still forming the advisory relationships necessary to manage their money effectively. And they don't necessarily respond positively to the brands that might have influenced the previous generation. "You don't have to be PaineWebber to get their attention," says Chris Dallas-Feeney, vice president at Booz-Allen Hamilton in New York. "In fact, they may even think PaineWebber is too expensive."

On the other hand, the newly affluent are not necessarily predisposed to look kindly upon banks, who may be viewed as stodgy and not particularly adept as asset managers. To overcome that resistance, many bank marketers are focusing their campaigns on the needs of customers rather than the institution's own brand appeal. This kind of advertising seeks to link the institution with customers' ability to achieve their goals.

Shaping the Appeal

The affluent market in the U.S. has been on a long-term growth path, despite recent stock market reversals. As tracked by the Spectrem Group, high-net-worth households — defined as those with at least $1 million in assets, excluding primary residence — reached 6.3 million last year, up from 1.8 million in 1990. According to the Chicago-based research firm, individuals under 55 account for about 40% of high-net-worth individuals.

While the proportional percentage of the under-55 category has remained fairly stable over the past decade, there has been a shift in the mix from wealth inheritors to entrepreneurs and stock option-rich corporate executives. A recent survey by New York-based HNW Inc., for example, shows that 59% of the U.S. wealth market (defined as assets of $500,000 or more) had attained that level of affluence within the last five years. The HNW survey also underscores how the '90s stock market boom and digital revolution has boosted this wealth creation.

All of this poses a challenge for banks that traditionally focused on serving inherited wealth with standardized products. "Many of the newly wealthy don't consider patronizing banks because of the stigma of standard solutions for all problems," says Jeffrey Buntin, chief executive officer of Buntin Group, an advertising agency in Nashville. "Banks seem a little mainstream and a little dull to somebody who makes several million a year."

To overcome that resistance, bank marketers are casting about for messages that will appeal to this segment. To begin with, snob appeal is out. The traditional images of genteel wealth amid sumptuous surroundings "like the Vanderbilts" are no longer relevant, says Joan Sullivan, vice president and division brand manager at Wilmington Trust Co. in Wilmington, Del.

What works better with the new generation of wealth is keen insight into the goals they want to achieve, such as building a secure future for their families and making sure enough money is left over for a comfortable retirement. Wilmington Trust hammers the point home in a brochure showing fathers at the beach with their children; canoeing with teenagers; or swinging in a hammock with a laptop while a young boy looks on. In the 19 photos, not one individual appears to be over 50.

Recognizing that the new wealthy are likely to be pursuing active careers, bank marketers are particularly focused on professional services. PNC Advisors, the investment management arm of PNC Financial Services Group Inc., tries to attract wealthy entrepreneurs with a brochure that details recommendations addressing specific concerns. These include the need to diversify a portfolio heavily concentrated in the entrepreneur's own business, and how to generate cash fast without giving up equity in the company. The brochure describes how specific bank services can solve a wide range of wealth management needs and features short case histories of past clients.

Under the headline, "Leveraging New Wealth," one brochure features a senior executive made newly wealthy after her company was acquired. Another shows a technology entrepreneur, posed beside two pedigree dogs, who needs help managing millions of dollars' worth of restricted stock after selling his company. There's even an appeal to corporate executives who are ready to cash in their stock options, under the tagline "Unlocking Paper Wealth."

"In our campaign, clients can more readily identify with themselves as opposed to identifying with us," says David Toth, senior vice president and director of marketing with the Pittsburgh-based company.

Denis Jackuc, creative director at the Frankfurt Balkind agency in New York, helped develop a campaign for Citibank's private banking unit that carried the headline, "Here's to never being satisfied." The campaign juxtaposed images of the Sistine Chapel and a bonsai artist in an effort to convey driven perfectionism, a trait that resonates with many working wealthy. "You are talking to people who make money far beyond the impetus of need," Jackuc says.

That theme also emerges in recent ads from Charlotte-based Bank of America Corp. and Northern Trust Corp., Chicago. Bank of America's promotion in the March issue of Gourmet magazine featured a well-appointed woman in her mid-30s with the message, "You'd like to go from smart and rich to smarter and richer. That's where we come in." A print ad from Northern Trust shows a model lounging on an outdoor Adirondack armchair under the headline, "She never worries about the future. Not since she found the perfect bank." Body copy reinforces the appeal to new wealth, saying, "You've worked hard for your money."

The Medium is The Message

While banks demonstrate some agreement in the type of message they wish to convey to new wealth individuals, the media by which they choose to convey that message varies considerably.

Most new wealth advertising appears in magazines and newspapers with affluent readerships, including the Wall Street Journal, the New York Times and Barron's, as well as upstart publications such as Business 2.0 and Fast Company.

But at least one consultant dismisses this traditional approach as ineffective. "The newly wealthy don't read newspapers or watch regular TV," contends consultant Rick Wemmers, president of Wemmers Consulting Group in Atlanta. "They watch CNBC, a financial news network." Wilmington Trust Co., for example, offers its advisors as commentators on CNNfn, a competitor to CNBC.

PNC Advisors says its strongest results come from direct mail and radio, rather than television. Still other bankers maintain that the most effective marketing strategy is to leverage personal contacts with established customers, "where the client is a known entity to us and we can strengthen the relationship," says Curtis C. Farmer, senior vice president and managing executive of marketing and strategic planning at the former First Union Corp., Charlotte.

Farmer argues that traditional image advertising isn't cost-effective unless the institution already possesses a strong brand image as an advisor to wealthy individuals, which would be the case with old-line trust banks such as Northern Trust. Cold calling, a trusted tactic in the brokerage industry, also doesn't work well with high-net-worth people because it's difficult for the institution to pre-qualify the target as an appropriate client. First Union, therefore, tries to locate new wealth management clients through referrals from established customers. "It's based on the idea that wealthy people associate with other wealthy people," Farmer says.

The "information seminar" occupies a middle ground between image advertising and referrals since it uses some advertising to bring people in and then relies on personal contact to clinch the deal. But even this tried-and-true marketing tool has changed in deference to the needs of time-starved new millionaires. PNC Advisors, for example, now broadcasts seminars as a teleconference in recognition that the working wealthy would rather interact from their offices than commute to an off-site conference room.

Alison Owen, assistant director of marketing at Northern Trust Bank of Florida, a regional division of Northern Trust, says her institution still prefers gatherings at the bank, but with a twist. Instead of going after an undifferentiated pool of high-net-worth individuals, Northern Trust segments its invitations by common interests. "Young, successful executives have no time for anything not related to their jobs or their families," Owen says. Northern Trust also hosts an entrepreneur's roundtable discussion group where small groups of like-minded business owners can network among themselves and meet Northern Trust bankers.

To be sure, marketing to the newly wealthy may seem less attractive in the wake of the market's dramatic downturn, which has undeniably dented lots of port-folios. According to Spectrem, the number of high-net-worth individuals, which rose steadily through the '90s, actually registered a significant drop last year, to 6.3 million from 7.1 million in 1999. The number is expected to remain stagnant for at least the next two years.

The dot-com fall-out prompted Bank of New York, last November, to pull one of three ads used to promote its private client services. The discontinued ad featured a young tech executive leading a meeting of Generation X employees. The body copy begins, "It finally happened. And what an IPO it was. Now what?" Other institutions are keeping up a full-court press in the belief that the downturn is temporary and may actually present a marketing opportunity. "The people who made it through this business market cycle are really looking for ways to hold on to their wealth now," says Wilmington Trust's Sullivan.

An ongoing outreach may be the better strategy, given that the new wealth segment has not yet developed firm allegiances and is relatively open to marketing appeals. New approaches need to be crafted, but the potential return justifies the effort. According to Joan Blackwood, director of marketing at FleetBoston Financial Corp.'s Quick & Reilly brokerage subsidiary in New York, "The reward is creating customers for life at the beginning of their investment lives."

Ms. Monahan is a freelance writer based in Seattle.

Copyright © 2003 by Banking Strategies, published by BAI.

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