With the rich not only getting more numerous but richer by the year, a new language of "wealth-speak" has been created by bankers who are desperate to get a slice of their lucrative business.
Readers of the Eighth Annual World Wealth Report, published this week by investment bank Merrill Lynch & Co. and consulting firm Capgemini, get full exposure to this euphemistic new-age language.
The word "millionaire" shows up only twice in the report — in the footnotes. Instead, individuals with more than $1 million in financial assets, excluding their main home, are called HNWIs, or "high net worth individuals" by the authors, using a term coined by the banking industry.
"Ultra-HNWIs" are the super rich, defined as a small but rapidly growing group of 70,000 individuals with more than $30 million in assets. It was Merrill who pegged the "ultra" threshold at $30 million, a few years ago.
The report estimates there were 7.7 million millionaires around the world at the end of 2003, up by half a million from 2002.
The head of Capgemini's securities industry, Alvi Abuaf, in an interview noted intense competition among banks and asset managers to snag these clients and get access to a larger part of their wallets. However, the study isn't quite as straightforward.
It prefers to frame the question in terms of helping financial institutions "solve" the world's 7.7 million millionaires' "financial problems."
Fortunately, along with Sofia Chappuis and Robert Low, both managers at Capgemini who helped compile the data and write the report, Abuaf spent considerable time explaining the report to those who have never considered writing a "family mission statement."
The report, for example, suggests that financial advisors should target the HNWIs in their "lean years" for "cross-generational planning."
Translation, according to Capgemini: Some wealthy people have children. Those children might not have much to invest today, but, once they inherit their parents' money, they may be tomorrow's mega-millionaires and will make their bankers very happy. By any other name, the strategy is simply one of sales' basic tenets: start small, finish big.
A lot of the suggestions "are based on common sense," acknowledged Capgemini's Chappuis.
"Holistic reporting" and "dynamic re-valuation" are among the other ideas discussed in the study. These are not as revolutionary as they might sound. They mean putting all assets and liabilities in one report rather sending the information out piecemeal, and adjusting clients' financial portfolios as market conditions change.
The report says that even the reasonably wealthy are always looking to the treatment handed out to those with a few million more dollars above them in the pecking order.
The "mass affluent" — those with $500,000 to $1 million — want financial planning, a service offered only to HNWIs just five years ago, according to Abuaf. Those with between $1 and $5 million, meanwhile, want the red carpet usually saved for those with more.
Those whose art collections and oil wells put them in a category of their own expect "platinum treatment," once reserved for institutions. That could include offering sophisticated financial tools, such as those that measure a portfolio's risk in the face of market swings.
These ultra-HNWIs have, according to the Chappuis, "multi-jurisdictional needs." This might mean they have a villa in Tuscany and an apartment in London, as well as a mansion in Connecticut.
They get their own "Family Office," a team of professionals serving their accounts under a single umbrella (sometimes referred to as a "virtual network"). It's as cozy as it gets for the super wealthy — the new aunts and uncles are tax accountants and trust and estate lawyers.
