As wealth distribution changes and the needs of the millennial customer change from the needs of those generations that have gone before, banks and wealth managers need to re-evaluate how they operate, and shake up their services if they are to survive and thrive in the new era.
It is universally acknowledged that, with longer life expectancies and a subsequent longer period of old age to save for, millennials are destined to work for much longer than their parents. This has not been helped by student loans, wages stagnating since the financial crisis and high rates of rent, all of which have made saving much harder for this generation.
Despite this, data indicates that 80 per cent of millennials are still interested in saving and keen to do so – with new technologies coming to the market to help them do just that. Companies need to respond accordingly.
The millennial customer is more globally mobile and digitally minded than their predecessors, with a preference for ethical investments. They will look for firms that can match those requirements.
It is without doubt that technology will prove a huge driving force in how firms adapt to meet the new generation of customers. Digital capabilities need to be complementary, not supplementary, with platforms providing 24-hour access from anywhere in the world.
Digital service also means there are increased opportunities to market to an audience of one. There are services that are very intuitive, which customers have come to expect, and to date providers have only dipped a toe into the wealth of possibilities available to them in this area.
In addition, while previously ethical investing was often dismissed out of hand, this has changed significantly and has become in some instances an overriding focus for millennial investors. Companies need to ensure this becomes a factor in the advice and services they provide.
However, rather than a purely digital solution, it would still appear that some of the seemingly old-fashioned methods are desired by the millennial generation, including emotional and personal advice that machines simply cannot provide.
Service is key. It will not be enough for firms to claim to provide a bespoke service, but not actually do so. Members of the next generation want to be understood as individuals and a bespoke client relationship will be paramount for this, so providers need to be able to deliver bionic advice and be able to know when to switch in and out of digital-to-human interaction.
The emphasis on corporate governance and principled companies is also not a new idea. Many of the old chocolate companies set up in the UK were established with the Quaker principles of doing good by their customers and employees. In a way we are seeing a return to this.
In essence, it will be an intelligent blend of both methods that will see companies survive with the new generation of wealth owners and wealth creators. It is important for firms to find a balance, making the simple and boring tasks automated, but focusing on human engagement elsewhere. Man with machine will ultimately win out over man without machine.