Many traditional wealth managers and private banks are struggling to adapt their offerings to rapidly evolving client needs. Younger generations like Gen Z (those born in the late ‘90s and early 2000s) are primarily considering three main criteria when selecting their wealth managers: transparency, hyper-personalization and impact.
Transparency is twofold. Not only is it key for these generations to understand the offering that wealth managers are proposing, including the fee structure, but it is equally important for them to understand who the ultimate beneficiaries of the investment will be and how these investments meet their longer term Environmental, Social and Corporate Governance (ESG) goals.
Hyper-personalization encompasses a client-centric approach that addresses each need in a personal way and delivers services from a holistic point of view. Clients today want to be treated uniquely and are seeking advice from their wealth managers across not only investable assets, but also increasingly non-investable assets, including pension plans, health and life insurance and even non-bankable assets such as real estate, passion assets and private businesses. The key here is the use of data analytics and insights to help provide customization at scale.
Clients today want to be treated uniquely and are seeking advice from their wealth managers across not only investable assets, but also increasingly non-investable assets.
Finally, investing with impact is the new mantra because the benefits to society are becoming equally important for those seeking to invest. Performance is no longer the only motivation and ESG considerations are now playing a pivotal role in driving the investment decision-making process. Today’s private banks need to be able to showcase their sustainable products and services as well as demonstrate and quantify how much they are ultimately contributing to making the world a better place.
Failing to provide services aligned with these expectations increases the risk that clients will seek alternatives for their investment portfolios. Our recent Accenture Orbium Wealth Management C-Level Survey found that when wealth handled by private banks is inherited, on average 32% of that wealth leaves the bank to be managed elsewhere. Banks need to respond decisively to stem this outflow as younger generations progressively take control of their inherited wealth.
Few private banks have fully adapted their service models to suit the evolving needs of younger clients. Today, the typical wealth management advisor is a 50-plus male with an illustrious career forged in very different times, who may struggle to relate to the attitudes, behaviours and needs of a new generation of investors. Younger clients seek advisors who speak their language, who understand their motivations and beliefs, and who offer them the flexibility and option to continue a trusted intergenerational relationship that started with their parents or even their grandparents.
Younger clients seek advisors who speak their language, who understand their motivations and beliefs.
Delivering the right services and offerings to the next generation can only truly be achieved at scale if advisors are better supported through technology. While the wealthiest clients do require a very high touch personalized approach using a mix of human and technology to efficiently address their needs, the mass-affluent segment is already a strong consumer of digitally enabled self-services. Providing the right channels will deliver benefits in two ways: giving a high level of satisfaction to customers looking for a quick, mobile-based capability to perform their operations and also enabling the advisors to free up valuable time that can be focused on strengthening the relationship with existing clients or targeting new clients.
Although the younger generation is still an enigma for many private bankers, it is critical that the needs of this generation are understood. The time is now for banks to build stronger foundations for tomorrow if they hope to continue the long-standing relationships they have built with clients over the last few decades.