[Super Rich Targeted] Securities Firms Fiercely Compete for Ultra-High Net Worth Clients... Organizational Restructuring and Service Differentiation

Securities Firms Strengthen WM Capabilities
Reducing General Branches While Increasing Ultra-High-Net-Worth Specialized Branches
Actively Targeting Ultra-High-Net-Worth Clients with Differentiated Services

Competition among securities firms to capture the 'super-rich' is intensifying. While the investment banking (IB) sector has been sluggish due to risks in real estate project financing (PF), the wealth management (WM) sector has steadily grown, leading securities firms to focus on strengthening their WM capabilities through organizational restructuring and service differentiation.

According to the financial investment industry on the 5th, securities firms are continuing to reorganize their structures to strengthen WM. They are establishing or upgrading dedicated asset management organizations, demonstrating their focus on the WM business. Shinhan Investment Corp. conducted a regular organizational restructuring in the second half of last month and established a comprehensive asset management organization. Through this, they plan to integrate securities and banking asset management capabilities to provide differentiated integrated solutions not only to securities customers but also to bank customers.

NH Investment & Securities integrated its existing Private Banker (PB) headquarters and WM division in December last year to create the Private Wealth Management (PWM) division, focusing on services for ultra-high-net-worth individuals.

Hanwha Investment & Securities upgraded its existing WM headquarters to the WM division in November last year and placed two headquarters under it?the Pension Headquarters and Retail Headquarters?as well as two offices: the WM Strategy Office and Platform Strategy Office.

The reason securities firms are focusing on strengthening WM is that the number of high-net-worth individuals is continuously increasing, leading to growing related demand. According to KB Management Research Institute's '2023 Korea Wealth Report,' the number of 'Korean wealthy' individuals holding financial assets of 1 billion KRW or more reached 456,000 last year, a 7.5% increase from the previous year. The number of wealthy individuals has steadily increased from 323,000 in 2019 to 354,000 in 2021, 393,000 in 2021, and 424,000 in 2022. Their total financial assets amounted to 2,747 trillion KRW. A PB from a securities firm explained, "These days, high-net-worth individuals are very interested in investments and are more proactive. They are increasingly entrusting asset management to securities firms rather than banks because they are interested not only in traditional stocks, bonds, and real estate but also in IB transactions. Since they pursue efficient asset allocation, demand for securities firms' ultra-high-net-worth services continues to grow."

Although the number of securities firms' branches is decreasing, branches specialized for ultra-high-net-worth individuals are increasing. According to the Korea Financial Investment Association, the number of domestic branches of securities firms was 797 as of the end of March this year, falling below 800. The number decreased from 883 in 2022 to 816 last year and dropped below 800 this year. While existing branches are being closed or consolidated due to the increase in non-face-to-face customers, branches for ultra-high-net-worth individuals are expanding. KB Securities opened the premium asset management center 'KB GOLD&WISE the FIRST' in Apgujeong in 2022 and opened its second branch in Banpo One Bailey in April this year. The third branch is scheduled to open in Dogok by the end of the year. NH Investment & Securities consolidated its existing Banpo WM Center and Bangbae WM Center into the Banpo Financial Center in May and opened the Banpo Branch in the Banpo Raemian One Bailey shopping mall, operating two branches in Banpo to meet the demand of high-net-worth individuals who prefer face-to-face transactions. Samsung Securities opened the 'SNI Family Office Center,' a dedicated family office branch, in January this year to expand its family office business. Samsung Securities provides family office services to clients with assets exceeding 100 billion KRW among ultra-high-net-worth individuals. Hyundai Motor Securities opened the Gangnam Premier PB Center, a VIP customer-specialized branch, in Yeoksam-dong in July last year. A securities firm official explained, "High-net-worth individuals often prefer face-to-face consultations for asset management, while other customers tend to use non-face-to-face services, so securities firms operate branches accordingly."

Securities firms are also introducing differentiated services for ultra-high-net-worth individuals. Most securities firms already provide not only investment services but also consulting on taxes, real estate, and inheritance, and they are aiming to secure customers through even more differentiated services. Recently, NH Investment & Securities signed a business partnership with Corini Korea, a comprehensive U.S. real estate solution platform company, for overseas real estate investment advisory services. Through this, NH Investment & Securities plans to proactively respond to the overseas real estate investment demand of high-net-worth individuals and strengthen customized asset management services by providing professional investment advisory services. KB Securities operates the 'Everywhere Private Banker (PB) Service' to enhance convenience for customers who find it difficult to visit branches due to long-distance residence or time constraints. PBs visit customers directly to conduct business.