What millennials expects from their financial advisor 2022, Are you part of this generation?

Devendra

Jun 17

Around $30 trillion in wealth is estimated to be passed down from Baby Boomers to millennials over the next few decades. According to a survey conducted by Capgemini Research Institute, they will be more discerning customers for wealth management organizations than their parents and grandparents.

The French consulting business looked at roughly 3,000 high net worth individuals (HNWIs) earlier this year. HNWIs are classified as people with investable assets of $1 million or more. It discovered that newly wealthy millennials are considerably more price sensitive than prior generations, especially during weak markets. The majority of them are changing advisors to discover a better fit than what previously worked for them.

"We have a tendency to believe that the wealthy are unconcerned with fees, yet they are because they pay so many," said Elias Ghanem, head of Capgemini Research. "In the past, great performance covered a lot of expenses, but as performance diminishes, fees will become more evident."

Another factor is the millennial "freemium" ethos that has emerged over the last decade. Younger HNWIs are less inclined to pay for basic access since they anticipate it to be provided for free in exchange for data or deposits.

About half of the millennials polled said they had switched wealth management firms in the previous year, citing excessive costs and a lack of digital skills as the key reasons. Over 70% of high-net-worth individuals have invested in digital assets, with 91 percent of those under the age of 40 doing so.

The best SCIP for Millennials

Millennials prefer a hybrid model for advising services and information, according to Capgemini. HNWIs became less reliant on wealth managers as a result of the epidemic and became more actively involved in investing, driving demand for self-directed solutions.

"From the perspectives of products, services, and distribution, HNWIs still value human connection and may be willing to pay for it," said Ketan Samani, chief digital officer at China Development Financial. However, he noted that there is a "dichotomy between full-on digitization and personal advisory."

Women will control 70% of global wealth in two generations.

Wealth asset management organisations should also prepare for another major shift in the investor pool: women's increasing relevance. According to the Royal Bank of Canada, women will control two-thirds of family wealth by 2030, and their share of global wealth will rise from around half to 70% in two generations.

According to an analysis by consulting firm McKinsey, much of the wealth of males who pass away will wind up in the power of female spouses who tend to be both younger and live longer, at the same time as women have made achievements in the workforce. "Women outlive men by an average of five years in the United States, and heterosexual women marry partners who are typically two years older," the firm noted.

"It doesn't mean that women will be wealthy and males would be destitute," Ghanem of Capgemini explained. "However, women are working more, are more educated, more engaged, and more visible and loud than they were earlier. What was present but unmentioned is now quantifiable. It's a great result of many years of pushing women to take the lead."

Are Female Millennials are more Investment driven?

Despite having a significantly larger percentage of global wealth, women feel less secure in their financial decisions than males, according to the Capgemini survey, and wealth management organisations must adapt their strategy if they want to keep clients.