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The impact of generational shift on client experience for investors

By Roger Portnoy, Chief Strategy Officer at Objectway

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by Objectway
| 30/08/2024 12:00:00

An extract from The Wealth Mosaic’s recently published Client Experience Toolkit 2024 report focused on how wealth managers can best deliver a modern client experience.

There has been much market commentary on the wave of capital that will be intergenerationally transferred in coming years. The question many are asking is - is this nothing but a myth? Despite widespread market predictions, will the actual pace and scale of asset transfer predicted by many lag behind these forecasts? Today's baby boomers and silver surfers, driven by longer lifespans and evolving lifestyle choices, may retain their wealth and liquidity far longer than pundits predict. Are we overestimating the speed and magnitude of this financial shift?

If this is the state of play, the fundamental question to answer will be whether or not the extended household that could span three generations becomes a single ‘unified’ client for the wealth manager, or instead fractures into different types of providers, service models and relationships. The former represents the most desirable outcome for any firm servicing the primary wealth owners of today, with the latter clearly to be avoided as far as possible.

The outcome of the above will be influenced and decided mostly by human factors, such as trust, past experience, accountability, and firm reputation. Technologies and solution designs that directly address customer experience and adviser engagement with clients will become key factors that determine if wealth owners encourage or discourage their children, grandchildren etc., to follow their own relationship pathway or not.

This perspective would seem to be supported by our own and more broad recent market research, which shows a common sentiment within wealth firms regarding the importance of client experience, along with adviser engagement; both sit at the top of the expected new investment priorities, and thus will take precedence in terms of spending and innovation over the next few years. 

Given the importance of engaging with next generation investors and fulfilling their experience, what is the best and most effective way to manage with them?
The new generation of investors will have a more diverse range of wealth “scenarios” encompassing both de-accumulation and accumulation pathways, and a broader range of behaviours and expectations, different from that of their parents' due to their digital fluency, social and environmental awareness, and desire for convenience, transparency, and accessibility. As digital natives, millennials expect seamless, user-friendly digital experiences, including in investing. They use more digital tools and value the convenience of interacting with advisers through these platforms. Additionally, they prioritise educational resources that help them make informed decisions.

To attract and retain these new clients, financial services firms will have to enhance their digital offerings. This includes developing robust digital platforms, mobile apps, and intuitive interfaces that allow easy access from any device. Personalised solutions will also be crucial, tailored to individual investment styles, behaviours, risk profiles, and preferences.

Moreover, the next gen appreciates convenience and automation in its financial activities. Investment firms may leverage artificial intelligence and machine learning to provide personalised investment recommendations and automate portfolio rebalancing according to individual risk profiles and goals. Understanding and adapting to these preferences will be essential for financial services firms to thrive in such an evolving landscape.

So, what kind of support or advice do young investors want when it comes to investing?
Regardless of age cohort, every investor, millennials included, seeks personalised, accessible, and transparent investment support. Technology and WealthTech partners can deliver this through AI-powered algorithms that analyse preferences, risk tolerance, and financial goals to offer tailored strategies and optimise portfolios. AI enhances customer relationships by automating administrative tasks, improving profitability and customer experience. About 80% of banks are investing in AI, and plan to increase spending in this area. However, operationalising AI's benefits remains challenging.

With the continued expansion, use and sophisticated monitoring of digital channels, organisations - especially the larger ones - have a significant opportunity to improve their ability to deliver scalable advice to clients through virtual agents and AI-assisted tools for advisers. However, even though the pool of relevant digital data that is acquired through engagement and transactional events continues to grow, the pace of adoption may be slower than predicted. When it comes to money matters beyond simple budgeting and personal financial management, human trust in a fully machine-based virtual agent for critical financial questions and life-changing events is still slow to emerge, although the advances in personalisation and plain-language conversations introduced by LLM and GenAI are promising and clearly game-changing.

The digital engagement landscape will certainly continue to evolve and grow, but for a while yet, the nature of this engagement will - especially for investors in the earlier stages of experience, confidence, and wealth accumulation - be more on awareness, education, and guidance, rather than on full outsourced decision making or full auto-pilot

Moreover, much of what our own research and market analysts foresee so far will happen regardless of the backdrop of intergenerational wealth movement or the entry of new digital-first clients into the wealth management space, delivering value and enrichment to all client segments.

In terms of where differentiation might occur, the emerging generation of investors is fully attuned toward their mobile device as a highly versatile and powerful smart integration platform for communication, data sharing, and engagement. This will anticipate that much more client engagement for wealth service provision will be satisfied through mobile as the primary vehicle, rather than either a gateway or ancillary touch point. This trend is driven by the growing demand for anytime, anywhere access to investment monitoring, real-time collaboration, digital banking, and self-service tools. However, at the end of the day, their effectiveness depends on the wealth firm's or bank's overall strategy for customer engagement. Mobile apps should be part of a comprehensive digital front-end that supports omnichannel seamless interaction, automated digital onboarding, and front-office productivity, supplemented by a full range of digital capabilities.

Summary
In conclusion, there are both generic aspects to the evolution of client engagement and client experience, and those that will be delivered to attract and retain the specific next-gen cohort. This speaks to not only increased focus, spending and innovation, but also perhaps, and most importantly, a significantly different approach toward UI/UX design principles to enable more omnichannel agility, and more real-time and near real-time response and engagement.

Interested in accessing the Client Experience Toolkit 2024? You can read the report online here.

ABOUT OBJECTWAY
Leveraging on 30+ years of business expertise, Objectway empowers 250+ clients in 15 countries with a comprehensive digital end-to-end Platform for Banks, Wealth Managers, Asset Managers, and their investors to scale their business, with a broader societal objective: preserve capital and improve financial wellbeing. Our unified, cloud-based platform integrates front to back-office operations, offering superior scalability and performance. As a global TOP-100 FinTech provider, we successfully manage over €1 trillion in assets and support 100,000+ investment professionals in overseeing €700 billion AUM for 5+ million investors. In a challenging market, Objectway’s as-a-service model ensures consistent, secure service delivery worldwide.

For more information, visit Objectway’s profile here.

ABOUT THE CLIENT EXPERIENCE TOOLKIT 2024
The Client Experience Toolkit 2024 is the first in a new series of Toolkit reports focused on key technology themes and tools impacting global wealth management. Each Toolkit report focuses on a key wealth management theme, segment or geography.

This first issue takes the form of a thematic report and shines a light on the trends and solutions influencing the successful delivery of client experience (CX) in wealth management. It features 11 showcases, each centred around a dedicated CX-relevant topic and related solution.

The report will be distributed at the Client Experience Toolkit Roadshow, hosted at individual events in Geneva, Zurich, London, Singapore and Dubai in late September and into October. These are free to attend for any form of wealth manager and provide technology vendors an opportunity to sponsor or demo.

Join us at the Client Experience Toolkit Roadshow 2024:

  • Geneva – discover more and register here.
  • Zurich – discover more and register here.
  • London – discover more and register here.
  • Singapore – discover more and register here.
  • Dubai – discover more and register here.