Single digit millionaires are targeted more often for toxic products, receive less service than “real” High Net Worth Individuals (HNWIs), and aren’t poor enough to even get sympathy if they make a bad deal. Sure, there are worse positions to be in, but let’s not kid ourselves: if you’re a single digit millionaire (especially in the $1 million to $3 million range), you’re in an awkward “sandwiched” position. Here’s why financial services, even the nice “premium tier” banking services, can suck for you:
1. A single-digit million doesn’t justify a whole lot of personalised service
This is the harsh, painful truth that you need to accept a single digit millionaire. In the eyes of the average financial institution, a net worth of less than $10 million is no longer considered very significant. Sure, you may get the title of HNWI; and you may even qualify to be accredited. But your net asset value is simply not high enough for a top wealth manager to make you a priority.
As an example, a typical wealth manager may charge between 0.5% to 1.5% of Assets Under Management (AUM). Managing $3 million of assets, at 1% charge, is only around $30,000 per year. That’s not exactly an amount that would convince them to tie their career to you.
This results in single digit millionaires being in a sort of financial twilight zone: you’re wealthy enough to receive some of the trappings of priority banking. You’ll get invited to the whiskey tastings, the annual financial outlooks with free buffets, etc.
But what you’re not getting, however, is a full-time financial professional, managing your portfolio like their careers depended on it.
2. Your needs are tougher to cater for, but helping you tends to be less lucrative
As a single digit millionaire, your financial needs are a bit trickier to handle. Private property, for instance, brings about options like cash out refinancing, as well as the issues of a variable rate mortgage (there are no perpetual fixed rate home loans in Singapore).
You’re more likely to own a business, require professional indemnity insurance, deal with forex rates, etc. Helping you is, to be blunt, more troublesome than helping the average client. It’s also possible that fewer financial advisors, planners, etc. are qualified to deal with a portfolio or financial situation as complex as yours (but paradoxically, as in point 1, the professionals who can do it are chasing higher fees).
Some people might call this a good problem, but you’ll notice it still includes the word “problem.”
3. Single digit millionaires are fast joining the middle-class demographic, so fewer institutions value the relationship
At the rate the cost of living is rising, a single digit million is fast becoming the average. As of 2024, Singapore has more millionaires than London. There were, at last count, about 244,800 of you out there (linked above).
In our grandparents’ day, a single digit million may have been enough for a life of luxury; but you’ve been around long enough to know that’s no longer true. Give it a decade or so, and a million dollars may be little more than upper middle, if not middle class.
For this reason, fewer financial institutions value long term relationships with your demographic. Back in the 1980s, if you had $3 million and threatened to take it elsewhere, bankers might come pleading with you to leave it with them (a situation which gives you a lot of leverage, like when you’re negotiating for a loan).
As of 2024, taking out $3 million prompts little more than a shrug from some banks. Most of the time, the call is just to verify your identity; not to check if you’re happy with their service. Needless to say, there’s no negotiating lower rates or deals with them at this level of wealth.
4. You’re rich enough to justify being sold dangerous things, but not poor enough that society thinks you need more protection
If you’re not an accredited investor, seriously consider staying that way. A single digit millionaire becoming accredited is like bleeding into shark-infested waters. You’re often just rich enough to be sold complex structured products, high yield bonds, things involving derivatives, etc. All whilst not being rich enough to afford the potential losses.
Couple this with the lack of personalised attention (see point 1), and it’s the perfect set-up for a dangerous financial mistake.
As an aside, consider that – in the eyes of your government and your society – you are not a person who needs protection right now. Having a single digit million implies a level of financial sophistication, whether or not that happens to be true.
5. Automated and “scalable” solutions for the average person are too simplistic for your needs
Have you noticed the number of robo-advisors and so-called “AI” powered banking apps of late? These are scalable approaches, allowing banks to deal with a large number of customers without mass hiring. And for the average person, many of these work fine: there’s a limited variance in the financial situations being dealt with.
As a single digit millionaire though, these sorts of solutions don’t really maximise what you can do with your wealth. There’s also the issue of more complex income streams or taxation issues (e.g., if you own a business or a property abroad), which most apps are not designed to handle.
So even if you choose to avoid premium banking, you’re in the conundrum of receiving limited help and advice.
Okay, so what’s the solution?
You need to find someone who is really hungry for your patronage. Not a gigantic financial institution that doesn’t value their relationship with you, or a wealth manager / financial advisor who can easily do well without you.
This means looking for an institution or expert who is focused on single digit millionaires: they’re honest about seeing you as a niche market, and are catering to you because they know the banks are too high-handed / greedy to do it. They may be small time compared to the big firms, but that’s how you know they truly need your portfolio to perform.
Reach out to us on Single Digit Millionaire if you need help, and we can put you in touch with people who will actually care.
