Targeting tycoons reaching the rich
The growing number of affluent Poles means the country's market for financial advisory services is exploding, and more and more companies are looking to capitalize on the boom. While firms focusing on the average earner have so far concentrated mostly on loan brokerage, this year the focus in the market is shifting to wealthy clients, who are being targeted with a larger array of financial services. But with two new entities set to enter the market, the real battle for the assets of the wealthy has only just begun.
With the Polish economy rolling along on all cylinders, the number of affluent citizens is growing at a rate of 10-15 percent annually. Almost half a million Poles either have some zł.100,000 of savings at their disposal, or earn zł.10,000 a month. These people are proving an attractive target for financial institutions, who are soon bound to face tougher competition in the battle for the most wealthy customers. Getin Holding's Noble Bank and German financial advisory giant AWD are already on the starting blocks.
Noble intentions
When Leszek Czarnecki, owner of Getin Holding and one of the richest Poles, comes up with an idea for a business, the market holds its breath. His new baby - Noble Bank, an institution targeting affluent customers - was supposed to open its first branch on May 20. However, the curious will have to wait for one more month to see the outcome of Czarnecki's new project.
"The first branch will open in mid-June in Warsaw's Mokotów district. By the end of the year we would like to have four to five branches and continue building the network in the biggest cities throughout Poland. They will differ from a regular bank in that we want to create more of a club-like, private atmosphere," Krzysztof Spyra, a member of Noble Bank's management board, told WBJ.
"We want to service a customer who is interested in contact with a true advisor rather than a 'typical' bank salesperson. It will be private banking based on two pillars, but with a bit of an upgrade. We will create an open product platform - its first and crucial pillar will be the advisory aspect and then there will be the growing product portfolio," Spyra adds.
All in the family
Noble Bank is the new name for Wschodni Bank Cukrownictwa, which Getin Holding took over at a cost of zł.210 million and is now transforming into a brand new institution. The project is run by Krzysztof Spyra, Jarosław Augustyniak and Maurycy Kuhn - the founding fathers of Open Finance, a financial advisory company which is also part of Getin Holding.
Interestingly, Augustyniak and Kuhn were also the people behind Expander. They established the company, which is now one of the most successful financial advisories, with two other managers - Adam Niewiński and Tomasz Marszałł, who are currently at the helm of another financial advisory firm - Xelion.
One of a kind
Xelion already targets a similar customer base to Noble Bank's potential clientele - this year the company wants to increase the number of its advisors from the current 160 to 250, and sell financial products worth zł.500 million. In 2005, the company outpaced both Expander and Open Finance in the amount of assets invested, but Tomasz Marszałł, Xelion's marketing director, doesn't like to be compared with the two other players in the financial-advisory market.
"You must not put Expander and Open Finance in the same sack as Xelion. The first two companies are intermediaries - they focus on loans. If we look at Xelion's revenues, 94 percent is generated by investment products. There are more significant differences like target group, product offer and, most importantly, the model is based on service rather than pure sale. Xelion advisors are more relationship managers then sales representatives," he stressed.
The company prefers to compare itself with its Italian counterpart Xelion Banca - also owned by Unicredit - or MLP, the European financial advisory giant that, as was recently rumored in the Polish press, has its eyes on the Polish market.
MLP's spokesperson Christian Maertin, however, dismissed these rumors. "We don't plan to open offices in Poland. In five to 10 years time maybe, as the Eastern European market is an interesting one but definitely not at the moment," he told WBJ.
Preparing ground
But while MLP is not likely to soon compete for customers with Xelion or Noble Bank, the German player AWD is already recruiting Polish advisors. The company advises 1.6 million Germans. Now it wants to do the same for Poles.
"As a subsidiary of AWD we are currently preparing ground for independent, complex financial advisory services. We are in the middle of a recruitment process and would like to open offices in major cities in Poland by the end of the year," Jakub Szczęsny, a management assistant, explains.
AWD is going to play the "independence" card, as all financial advisors in Poland are now controlled by big financial institutions - Xelion by the Italian Unicredit, Open Finance by Getin Holding and Expander by GE. "Our services couldn't be referred to as as independent if we were in any way related to a financial institution," Szczęsny explains.
Big business
In any case, the sector is still quite young and likely to absorb many players both among the richest and the emerging Polish middle class. "The financial advisory market is going to develop really fast for a couple of reasons. First, because of decreasing interest rates, rapid growth in the investment funds on offer, also the customers' awareness is much bigger. Finally, large financial institutions are adjusting slowly to the needs of the market for advisory services," Xelion's Marszałł explains.
Some of the large financial institutions in Poland offer private banking services for the wealthiest customers - these include the full range of banking services, financial advice and a number of additional services. BRE Bank and Citibank are the pioneers in the field, but also Millennium, PKO BP, Pekao and other lenders have a special offer for VIPs.
Rich list
BRE Bank's spokesperson Paweł Wróbel stresses the fact that one fourth of all entrepreneurs from Forbes' list of the 100 richest Poles are their most cherished private banking customers and that BRE has a 10- to 12-percent share in the market of financial services for the wealthy.
"The customers of BRE's private banking are people enjoying both high financial and social status. As a rule they hold assets exceeding zł.500,000. However, there are also people with smaller savings but of high social standing - lawyers, artists, doctors," Wróbel explains. "The real added value of our private banking is investing our customer's money in financial instruments - even if BRE is not the author of a particular product," he adds.
Undaunted about the news of the growing competition, Wróbel commented: "What can we do? We're the first on the market and we'll just keep up the good work." With the market expanding as rapidly as it is, there should be plenty of work to do.
