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By Ben Revill, Business Consultant at Xpedition 

Everything you think you know about customers’ experiences with money has changed. This is due to the 17 million people dominating the job, housing and money market – Millennials.

They’re leading and founding businesses, buying their first, second and third homes and dominating the financial market as Baby Boomers enter retirement age. Aged 21-39 (though it is hard to determine an exact, globally agreed timeframe), Millennials in the UK are not the young, Instagram-obsessed teens they’re sometimes assumed to be. In fact, by 2025, Millennials will comprise three quarters of the global workforce.

The Great Generational Wealth Transfer

 Though Millennials currently hold a smaller percentage of investable assets than Baby Boomers and Generation X, estimates suggest that Millennials are positioned to receive more than USD68 trillion of inheritable wealth by 2030. This ‘Great Wealth Transfer’, the considerable wealth Millennials are due to inherit, means firms need to assess their current digital capabilities and honestly evaluate how ready they are to meet the expectations of this next-generation of investor. And whilst some firms have recognised the need to pivot and update their client experience offerings, many firms are still lagging behind.

Why is the client experience important? As the first generation to grow up surrounded by the internet, Millennials are digital natives. As such, they have a very close relationship with technology that previous generations do not. With the transfer of wealth to the younger generation already happening, Millennials expect that the experiences they have with their wealth management firm of choice will mirror the experiences that they have with the multitude of other companies they interact with on a daily basis. For example, from retailers and restaurants, to taxis and travel agencies, Millennials expect to be able to go online whenever they choose, access their account details, speak to a customer or client service representative (or even a chatbot that uses the latest AI to replicate the behaviour of a human advisor), and conduct all of this on their phones, tablets, smart watches or laptops.  There’s no reason for them to assume that interactions with their wealth managers should be any different to the that an ‘always-on’, 24/7 digital engagement they experience in other industries.

Regardless of location, Millennials expect a modern client experience when interacting with their wealth manager. Those firms that are not embracing the latest technology and implementing it effectively to deliver high-level, competitive services, risk losing out when competing to win new clients. Likewise, those same wealth managers will also test the loyalty of the next-generation of investor. Unlike older generations, Millennials are less likely to stay loyal to a particular brand if a better offer or service can be found elsewhere. If a client does not feel that the customer experience meets their expectations, they will simply take their business elsewhere.

‘Traditional’ wealth management experiences might have been enough for Baby Boomers and Gen Y, Millennials want more from their wealth firms. From greater flexibility and streamlined onboarding processes, all the way to proactive, personalised financial planning recommendations, there is no more room for a one-size-fits-all approach.

And if you’re used to dealing with businesses who are happy with the status quo in regards to financial management – think again. Millennials are not just getting started in their careers. They’re already CEOs, MDs, CFOs, founders and decision makers. If you don’t adapt and provide a superior service that meets their preferences, you could easily lose a business client as well as an individual client, and with it, a significant amount of wealth.

So just how will money management change?

More Data, Better Experience

 Issues surrounding data security regularly makes the headlines and for good reason. But despite concerns from some quarters regarding the sharing of data and how much organisations today know about clients, overall, Millennials are generally happy to share their data as long they receive a modern, tailored client experience in return.

In order for wealth managers to effectively deliver the type of client experience the new generation expect, investments in the latest technology and strive towards towards digital transformation are essential. A ‘digital-first’ wealth management firm will find it can gain increased visibility into their clients full situation, tying in much of their personal information, their interactions with the firm, their investment preferences and more.

This increase in data leads to more in-depth conversations and more opportunities to offer clients the solutions that are right for them, and at the right time, each tailored to their specific wealth goals. All of this intelligence is held in a Customer Relationship Management (CRM) system. A CRM is a powerful digital solution that collates client data and provides firms with the ability to drill down into specific client profiles and effectively analyse the data. An advanced CRM solution enables wealth managers to offer a far more bespoke service, meeting the clients needs and expectations and in doing so, also helping their firm stand-out from the competition. The better the service offered, the closer the relationship and the higher the level of retention.

The Wealth Management Landscape is only Going to get Busier

People are no longer sticking with the same financial institutions for long periods of time out of simplicity. With the advent of new technology in financial services, 57% of Millennials have said they would change firms for another if that one was to provide a superior technology platform. Historically, wealth transfers from one generation to another have also resulted in 90% of heirs changing their advisors. And in another recent study, 73% of respondents indicated that they are already engaged in a relationship with more than one wealth manager. Clearly, the more you can do to to showcase your understanding of the next-generation of client and evidence your efforts in investing in the latest technology to meet their needs, the greater your chances of reducing clients transferring to a competitor.

There’s no doubt the landscape is getting busier. With the advent of ‘challenger banks’ – those which focus purely on app-based, digital offerings and invest heavily in customer service such as Monzo and Revolut – you need a USP which will position you as a leader in an increasingly competitive sector.

The Hybrid Advisor Model will thrive 

Advancements in automation and artificial intelligence are helping organisations of all kinds and it’s no different in wealth management. For example, the latest AI capabilities, can help relationship managers and advisors better serve every client by surfacing intelligence that helps firms proactively provide advice regarding future investments and what clients should do next. And despite some fears in some quarters that AI will eventually replace human advisors, or that ‘robo-advisors’ will take over, the reality is AI and automation will help firms enrich the client experience, but it won’t replace human advisors. There will always be a requirement for experience and the ‘human touch’.  Take the 2019 survey by Wells Fargo/Gallup for example, that showed 84% of investors believe human advisors will be always be needed.

The future of financial advice in wealth management is the ‘Hybrid Advisor Model’; the emergence of experiential human advisors supported by the latest AI, automation and CRM capabilities. The Hybrid Advisor Model enables firms to find a synergy between technology and human, combining the best of both worlds. So whilst it is easy to think that in a world obsessed by technology, everything must be digitalised, in the wealth management industry, where experience and expertise is a valuable commodity, the human touch will always be welcome.

Of course, establishing a successful Hybrid Advisor Model takes effort and time, but the rewards are worth it. For example, with a customised CRM solution tailored to a firm’s specific needs, advisors will be able to access detailed intelligence that surfaces the best opportunities and provides advice on how best to approach the new opportunity based on historical data points. Modern CRM solutions also help break down the silos that often exist in wealth management firms, meaning more data is shared amongst teams which leads to a more comprehensive view of the client and in turn, more bespoke services that can be offered. Technology also provides firms with more intelligent marketing, communication and event automation tools, again helping to strengthen client relations. And the right technology can help streamline the onboarding process, turning a usually laborious paper-driven process into an efficient, digital task that minimises frustration for both the client and the firm.

Firms Need to be More Accessible 

Millennials are always on the go – there’s a reason that they are the champions of flexible working. As such, they’re less inclined to want to meet their wealth advisor in a specific boardroom, at a specific time and in a specific location that might not be suitable for them. And with mobile banking poised to overtake high street banking in the next two years due to rapid uptake, and two thirds of British high street banks already having closed in the last thirty years, clients and advisors need to take note. Whilst not in direct competition with retail banks, this shift in the client/financial institution interaction provides a strong indication that clients want to be able to receive, access and discuss their finances whenever, and wherever, they are. Other wealth management firms are offering a modern, holistic client experience. Yours needs to too.

As the generation of investors in their 70s start transferring their finances to the heirs, it will be the wealth managers who are already showcasing their digital prowess who will thrive. Others need to urgently shake up their current digital and technology strategy in order to appeal to the next-generation of investor so that they may retain the wealth that already exists within their firm and ‘market their appeal to new clients in this increasingly competitive market.

From smart challenger banks to the rise in cryptocurrency and Bitcoin investing, Millennials are exposed to more diverse and technologically advanced financial opportunities every day. When it comes to digital transformation, financial institutions are battling it out to try and stay one step ahead of the competition, but many are being left behind due to a misguided belief that what worked in the past will work for future generations. Add to this senior management and boards of directors that may be resistant to digital transformation, and the result is a firm that only realises their mistake not to evolve to meet the needs of a new generation when it’s too late.

As Millennials take centre stage, firm must rethink their digital strategies now in order to appeal to a new generation of investors. A generation poised to benefit from the greatest wealth transfer in history.

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