Affluent Clients Have Become Much Less Confident in the Banking System

Wealth management providers in the banking industry must highlight their stability to maintain their market position, says Cerulli.


Illustration by RIA Intel

While affluent investors appear to be confident about the safety of their own assets, their feelings about the overall health of the banking segment are much less sanguine.

According to a new report from Cerulli Associates, 28 percent of affluent households report using a bank-related platform as their primary provider of financial services, with 18 percent of those households relying on bank advisors, 7 percent using depository programs, and 3 percent working with private banks.

Reliance on bank advisors (29 percent) and bank deposit programs (15 percent) is most prevalent among households with $100,000 to $250,000 in investable assets, and those numbers drop with increasing wealth. In all, 43 percent of households with $100,000 to $250,000 in investable assets use bank providers as their primary financial services option.

While the research finds that 95 percent of all affluent investors are confident about the disposition of their own assets, just 59 percent of those same investors indicate that they’re “very” or “somewhat” confident in the stability of the banking system itself.

Investors who work with firms associated with the large, full-service banks in the wirehouse channel (71 percent), as well as those who work with advisors in the banks themselves (73 percent) express the most confidence in the health of the segment. Private bank clients, however, paint a much more uncertain picture, with only a 58 percent confidence level.

Furthermore, more than half of all respondents (52 percent) report a decreased level of confidence in the banking segment in the previous months, and nearly two-thirds (63 percent) of investors favor an increase in federal regulation designed to reduce the likelihood of future crises.

“With all financial services built on a foundation of trust between clients and providers, maintaining, or in this case rebuilding, a perception of long-term stability is crucial,” said Cerulli director Scott Smith, in a statement. “Recent events in the banking space could be an opportunity for advisors to reassure clients of banking stability and provide an empathetic ear for depository customers’ concerns. This can help advisors retain maturing clients as they accumulate greater wealth.”

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