Private banking

There are about 2,000 families in Russia managing capital worth over $10 million. Let’s take a look at what resources and services are available to ultra-wealthy families in the field of consulting, especially in the field of family offices.

Family offices or Private banking

By mid-2023, there were 21.7 million High Net Worth Individuals (HNWIs) worldwide who own $1 million or more. There is also a category of Ultra HNWI (Ultra HNWI) with wealth over $30 million, their number is about 580 thousand.

Large banks offer special conditions and products for wealthy clients through individual banking (Private Banking). This industry includes several key areas such as investment management, tax and legal advice and a wide range of lifestyle services, from concierge services to real estate transactions.

Despite temporary downturns caused by economic crises, global wealth continues to grow over the long term. It has tripled from 2000 to 2021. According to expert estimates, setting up your own family office becomes advisable when you have assets worth more than $150 million. Such a structure requires a complex of qualified professionals, including investment advisors, brokers, lawyers and art experts.

Since the early 2010s, more affordable structures that provide services to several wealthy families at the same time have been actively developing in the market. These organizations are able to pool more resources than a typical family office, but they are more specialized and compact than banking corporations. This means they may have limited access to additional services such as concierge services or exclusive participation in events.

Large banks around the world, not wanting to lose clients, are actively creating and expanding their own multi-family offices. For example, in 2023, the leader of the Singapore market, DBS Private Bank, launched a similar service. Additionally, J.P. Morgan, as mentioned earlier, opened its own multi-family office in the United States.

Investments and inheritance

According to research by Frank Research Group, conducted jointly with a family office consulting company, there are currently more than 2 thousand families in Russia with a capital of over $10 million. Approximately 10% of them have their own family offices, while another 30% manage their assets and receive non-financial services through trusted agents.

The main focus is on providing a wide range of services needed by wealthy families at different stages of their lives – from managing and investing funds to inheritance issues and creating an inheritance. Special attention is paid to non-financial services.

For example, the Lifestyle line includes not only services for traveling and comfortable life, but also medical and educational services. This means system planning of education for the whole family and sometimes for several families operating in different countries.

While the Inheritance line covers issues from the transfer of inheritance to future generations to philanthropy.

The future of private banking in Russia and the world

According to research conducted by Frank RG research, in 2022 a decline in the volume of funds managed by Russian banks has become noticeable. This is due to several factors: the movement of capital abroad, losses in investment portfolios and investors’ preference for less liquid assets such as gold, real estate and business.

It is interesting to note that the number of people in Russia willing to hold more than $1 million  fluctuates:

In 2020, there were 43.2 thousand of them.
In 2021, their number increased to 46.2 thousand.
In 2022, however, it dropped to 37.8 thousand.

These data are based on Frank RG’s study titled “Private Banking in Russia 2022”, and they refer to the number of clients of Russian banks with liquid assets of $1 million or more.