[PB Travelogue] The Wealthy Seeking 'Business Opportunities' Beyond Asset Management

Interview with Kim Nogeun, Head of Shinhan Bank PWM Family Office Gangnam Center PIB Center

"For wealthy individuals who have amassed enormous fortunes, business is as important as wealth management (WM). For example, if they want to appoint a specific person as the Chief Financial Officer (CFO), they need advice on whether this person's reputation is good, or if they are planning to acquire a company, they want to know how the market evaluates that company."

Teheran-ro in Gangnam-gu, Seoul, is called the 'land of opportunity' that produces wealthy individuals. It is advantageous for starting businesses because many startup support spaces and institutions are concentrated there, and since many venture capital (VC) firms are also concentrated, fundraising is easier. This is why Shinhan Bank opened the 'Shinhan PWM Family Office Gangnam Center' targeting VIP clients with assets over 10 billion KRW right in the middle of Teheran-ro.

On the 8th, the PIB Center at Shinhan Bank PWM Family Office Gangnam Center located on Teheran-ro in Gangnam-gu, Seoul, is the only PWM branch nationwide using the name 'PIB.' The PIB Center, ambitiously launched by Shin Ok-dong, Chairman of Shinhan Financial Group during his tenure as CEO, provides both private banking (PB) and investment banking (IB) services, covering everything from core asset management of existing PB centers to corporate finance.

Kim No-geun, head of the PIB Center at Shinhan Bank PWM Family Office Gangnam Center, whom we met that day, is an IB expert who has worked in the fields of fundraising and investment finance for over 20 years, unlike other PB centers. Half of the staff working at the PIB Center are existing WM experts such as real estate specialists, and the other half are IB experts.

Shinhan Bank newly pioneered the PIB area to meet the needs of high-net-worth individuals who demand more than WM. Center head Kim explained, "When you look at ultra-high-net-worth individuals, many are interested not only in WM but also in fundraising or company acquisitions related to their own businesses. Among them, quite a few are customers born in the 1980s, who could be called young wealthy individuals."

The proportion of young wealthy clients at Shinhan Bank's PIB Center varies depending on the definition but is about 20-30%. Especially since it targets ultra-high-net-worth individuals, many have built wealth through startups and entrepreneurship. The center explained that some clients in their 30s and 40s have assets worth 100 to 200 billion KRW through exits after Series A and B funding rounds.

Center head Kim said, "With the advent of a low-growth, low-interest era and the expansion of the capital market, VC has grown, and young people who have entered growth industries based on this have become a pillar of PIB Center clients," adding, "Many young wealthy individuals start and operate startups, raise new investments, sell, and plan other businesses."

What about their investment tendencies? The unexpected answer from ultra-high-net-worth young wealthy individuals was that they 'do not have the capacity to pay much attention to investments.' Their main investment method is not separate asset management or investment but corporate management and business.

Kim said, "Especially customers running startups face a life-or-death crisis that they could fail anytime if they cannot raise funds, so they often cannot pay much attention to other areas," adding, "When venture capital (VC) firms decide on investments, the most important factor they watch is how focused the CEO is on their work."

Nevertheless, their decision-making style is said to be 'cool.' They make decisions after sufficient consideration, quickly accept the results, and prepare for the next steps. They are also proactive. For example, when investing in artworks, unlike middle-aged clients, they directly communicate with the world's top three auction houses?Sotheby's, Christie's, etc.?to make large transactions, according to the center.

Due to their focus on business, their asset portfolios are surprisingly simple, according to center head Kim. PB team leader Jo Young-oh, who was present, said, "Clients whose asset size exceeds a certain level tend to have very simple products or portfolios they manage."

Especially, young wealthy individuals are interested in real estate. Given their substantial asset size, their focus is not on simple houses or apartments but on commercial real estate around Gangnam and Samsung areas. For example, the center explained that the spouse of a young wealthy client who accumulated significant assets through an exit once requested, "Please recommend a building in a location that can be passed down for generations."

Center head Kim explained, "Looking at the portfolios of high-net-worth young wealthy individuals, there are differences depending on personal investment tendencies, but domestic and overseas real estate is always included," adding, "The rest is held in dollar bonds or deposits, and a very small portion is invested in high-risk, high-return assets such as unlisted stocks." Team leader Jo also added, "Clients managing large funds prefer a stable asset management base," noting, "Although the real estate market has been sluggish due to high interest rates, there has been little change in the prices of commercial real estate within about 5 km of Gangnam, especially Samsung Station."

So, what differentiated services does the PIB Center provide to them? Services commonly associated with PB centers, such as concierge services (which provide various conveniences to clients), are not what ultra-high-net-worth young wealthy individuals want. According to the center, what they want are business opportunities through the credibility of a leading domestic bank, such as advice on fundraising or management.

Center head Kim said, "Arranging meetings or parties for second-generation business owners is something most financial institutions can do," adding, "Instead, the core is advising clients through Shinhan Bank's brand network, such as inviting domestic private equity (PE) leaders to get tips on raising funds from overseas VCs."

This content was produced with the assistance of AI translation services.