The wealth management industry has undergone significant changes to adapt to shifting in demographics. As wealth management advisors and their “baby boomer” clients age, the next generation of investors—generation X and Y—is gaining ground. The shift in the client base has altered expectations and preferences significantly with the advent of new technologies and memories of the most recent financial crisis.
To remain relevant, the wealth management must meet the expectations of this newer generation, especially in terms of digital solutions and services. According to Refinitiv, a leading provider of financial markets data, 68% of wealth management advisors see their biggest challenge as learning about and keeping up with new technology. They see getting ahead of the game as fundamental to growing client portfolios.
Generational Wealth Flow
Between 2017 and 2060, around US$50 trillion worth of wealth is expected to move to the newer generation in what is arguably the largest transfer of wealth in history. According to Deloitte, the wealth transfers to the next generation have resulted in 90% of heirs changing their advisor. Their expectations must be turned into an opportunity for wealth managers.
A study by Roubini ThoughtLab has observed that almost 50% of investors are ready to work with a new asset manager if their expectations are not met. This reflects the shift of wealth from baby boomers to Gen-X and millennials, and a change in gender with more women investors acquiring responsibility for wealth management by inheritance and their own acquisition.
Essentials for successful digital transformation
According to Finextra, a leading independent newswire and information source for financial technology, understanding the basic principles of creating sustainable and smarter digital wealth management capabilities is vital to the success of digital transformation in wealth management.
1. Understand Client Needs: Understanding client needs is the most crucial success factor in any business digitalization. Wealth managers must develop a framework to understand customer journeys to gain insights into the challenges and solutions and develop a sustainable winning digital strategy.
2. Focus on multi-generational investors: Focusing exclusively on millennials in a digital strategy is a mistake. Millennials might hold a larger portion of the wealth management client base, but all other generation clients also respond better to digital-first services. The digitization process must address the varied investment goals of multi-generational investors.
- 3. Focus on outcome not product: Build goal-oriented products that can be personalized. Wealth managers must shift from the traditional product selling approach to selling outcomes to derive a greater audience and close better deals.
- 4. Drive agility through automation: More than any other industry, financial services require more complex and advanced tools to analyze a huge volume of data. Wealth managers must instill efficiency and agility in their business through automation.
The Family Office Goes Digital
The Family Office is proud to be a trailblazer in the digital transformation of wealth management. Our new digital platform boasts numerous features that is the first in the region to offer clients this level of control, transparency and convenience at the click of a button.
The foundations for the digital journey of The Family Office were laid in 2014. The new digital platform is the fruit of more than six years of judicious effort. This platform aims to level the playing field by making exclusive private investment opportunities in alternative assets accessible to a far broader audience of qualified investors than ever before. Starting with a fully automated digital onboarding experience, clients get direct access to the best international deals, regular updates on their portfolio performance, insightful educational content, and invitations to exclusive webinars and events with industry leaders.
Disclaimer: The Family Office Co. BSC (c) is a Category 1 Investment Firm regulated by the Central Bank of Bahrain C.R. No. 53871 dated 21/6/2004. Paid Up Capital: US$10,000,000. The Family Office Co. BSC (c) only offers products and services to ‘accredited investors’ as defined by the Central Bank of Bahrain.