Clients are changing, and you must too

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Clients are changing, and you must too
(Anna Shvets/Pexels)

A significant change is happening in wealth management, both in terms of who is managing money and whose money is being managed.

One challenge we see is passing on knowledge from one generation of advisers to the next, and a second is ensuring there are enough advisers to cover demand from a new generation of investors who have different thoughts and priorities when it comes to wealth management.

This leaves wealth managers at a crossroads: only firms that begin adapting now will be able to turn these into opportunities.

The greatest wealth transfer

The biggest trend affecting money management is that the wealthy are getting younger.

Baby boomers, and the generation before them, the silent generation, are set to leave $30tn-$68tn (£24tn-£55tn) to their children, who are largely millennials. This will be the single greatest wealth transfer of our time.

But who, exactly, are millennials?

They are a more diverse group of high-net-worth individuals than the sector is used to serving. In this cohort, there are a growing number of women and non-Western people.

Just in the US more than 44 per cent of millennials are non-white, and by 2030 women will have about $30tn in assets.

Yet, it’s not just important for wealth managers to understand that they’ll soon be sitting across the table from faces they may not have previously.

They also need to understand what millennials want and how to translate that into service.

What millennials want

Unsurprisingly, and this point cannot be emphasised enough, many millennials expect their wealth management experience to be, at least in part, digital.

In their digital engagement, millennials often use tools like apps to arrange their lives, and more importantly to track their progress across any number of fields and set well-being targets.

Managers who primarily focus on the details of investments in discussions may not keep millennials engaged.

This sets a baseline they also expect from their wealth management. When it comes to managing money, we see this manifest itself in the form of goals-based investing.

Here, investments are a means to enable lifestyle objectives – buying a house, taking a few years off and travelling, or starting a family or a business.

Getting to know these elements and why they are important is critical because they drive trust in managers.

This means that managers who primarily focus on the details of investments in discussions may not keep millennials engaged.

Currently, many managers are falling short in this regard – fewer than a third of millennials feel their advisers actually get to know them.