Brokerages all-out to court the super-rich

Generous extra services and perks such as tax consultations spark disputes


Major brokerages are rushing to offer comprehensive asset management and generous complementary services to super-rich customers, but some argue that non-financial services such as free tax counseling might violate regulations.

The underlying trend is for securities houses to court so-called “VVIP” customers in the top 0.1 percent in terms of annual income. For these super-rich customers, brokerages are currently offering not only financial services but also free package tours, members-only arts events, matchmaking services for their children and taxation advice.

The intensifying competition over top-ranked customers reflects brokerages’ attempts to diversify their income. Big individual customers with huge amounts available for stock and bond investment are deemed far more important than ordinary retail investors. 

Mirae Asset Securities runs a special exhibition in Seoul for its VIP customers. (Mirae Asset Securities)

But the practice is disputed. The service quality gap between general customers and the super-rich is widening rapidly. This inequality heightens a sense of being left behind the less wealthy.

Another issue is the legality of extra services such as one-on-one tax counseling and other financial transactions for super-rich customers. Accounting firms claim that such in-house tax advice is illegal.

Nonetheless, VVIP marketing seems to be here to stay. Samsung Securities, for instance, runs seven centers dedicated to very wealthy customers, with 66 senior private bankers managing a whopping 8 trillion won worth of assets. The centers reportedly have signed on 321 super-rich customers who have each put more than 3 billion won under the brokerage’s management.

Mirae Asset Securities launched on Monday three VIP centers in affluent districts of Seoul, combing asset management and corporate consulting services.

Korea Investment & Securities recently opened the V Privilege center in Gangnam targeting the super-rich, and plans to open another shop in the southeastern port city of Busan within the first half of this year.

Daewoo Securities, which runs three VVIP centers in Seoul, recently launched a new shop for the wealthy at the Finance Center in central Seoul last month.

Hana Daetoo Securities take care of their top customers in concert with Hana Bank, running three centers for customers with more than 1 billion won for financial investment.

In recent years, brokerages are being forced to provide more than financial services to super-rich customers. It is now common that securities houses advise their top customers on real estate, inheritance, corporate decisions and taxes. In addition, cultural events, golf reservations, counseling on children’s marriage and education are provided as complementary lifestyle services.

Some “concierge” services are accused of irregularities. One particularly controversial service is that top-ranked customers are now allowed to talk with analysts in a closed one-on-one meeting and get counseling on financial management ― a meeting that could lead to insider trading.

Tax accountants are also attacking the provision free tax counseling. Under the current law, local financial companies such as banks and brokerages cannot offer tax consultation services to their customers.

By Yang Sung-jin (insight@heraldcorp.com)