At our recent Swiss WealthTech event in November, Carina Schaurte, Vice President and Financial Services Lead, Switzerland, at Capgemini Invent, spoke about creating a customer-first strategy to capture the next generation.

“We all know that we are in the midst of a transformation from both a customer service delivery angle, and needing to meet the needs and demands of the next generation of wealthy,” said Carina Schaurte, Vice President and Financial Services Lead, Switzerland, at Capgemini Invent.

Indeed, there is a vast wealth transfer coming up, which will be ongoing for the next two decades. Some US$30 trillion of wealth will be transferred down the generations. “The demographics receiving that wealth will, for the most part, be under 40 years of age and have very different needs and expectations when managing their wealth from those currently holding it. There are also distinct subsectors, notably women, who could receive up to 70% of wealth transferred,” she said.

As with male investors, there are many different needs and situations. “But the key priority for women is quality of service. There is less concern about transparency and fees. The value-added services are around lifestyle and budgeting as well as retirement and tax planning, which are key too, but not more important than lifestyle issues. And generally, female investors do not have the thrill of the investment chase like men do”, said Schaurte.

Another segment to watch is the tech-wealthy high-net-worth individuals (HNWI). They are also selling their startups and making money there. They have a high affinity with tech, but once they go upward of US$1 million, they go back to established banking brands as they trust them more and want, over everything else, to safeguard their wealth and preserve it.

Loyalty
“One thing all receivers of wealth have in common is that their loyalty levels are not that high. The younger the client, the more likely they will at least look elsewhere. We found that 34% of HNWIs either were thinking of or would split their wealth between different providers. The reasons cited could largely be grouped into dissatisfaction with their current provider regarding the level of digital service provision or that they were more inclined to place their assets with a provider they saw as more cutting-edge and innovative,” commented Schaurte.

Other reasons to switch include the high fees and pricing, the transparency of the service and the overall service proposition, and whether a fair price for the service received is key. Value for money, especially, is driving fee sensitivity, following MIFD2. “Younger generations are unwilling to pay a high price when they cannot see the value. They have different and sometimes higher expectations aligned with both self-service and hybrid advice and an expectation of an on-demand, Omni-Opti-channel experience as they find in other areas of life,” said Schaurte.  

Winners and losers
“But where do people want to move their money? On the global scale, wealth tech and big techs are benefitting, scoring highly on the ability to be innovative and digitally advanced. The Swiss HNWI sector is still, however, very closely aligned to the traditional wealth management model,” said Schaurte.

“But what is apparent is that the newly wealthy want to have a convenient and personalised service, and for this reason, we are seeing growth within the family office sector as a means to achieve this. Indeed, the family office model satisfies the need for transparency and a ‘one-stop-shop’ approach. It encompasses personalisation and the need for education and guidance.”

“In addition, we see that technology allows the family office to move down the wealth scale and service those still building their wealth. Indeed, the family office environment is a very different experience from private banking, and the level of care and personalisation is akin to that which next-gen clients are well used to from other industries and now expect,” Schaurte added.

So how can wealth managers capture and retain the next-gen?
The trick when attracting and retaining the next generation is in the delivery of the service as well as the service itself. They want to understand the role that wealth plays in their life and the purpose of wealth. Schaurte said: “As they are younger, there is also an education element and a need for conversations around tax and estate planning, ESG, and the like. Overall, the expectation is that the adviser will have an empathetic understanding of where they are in their life and their goals, aspirations, and values.”

Indeed, their lifecycle is now different from those retiring; it is less linear and is about the current lifestyle and flexibility to take time out to repivot, which requires more personalised and skilled planning and advice. And, of course, all of this needs to be delivered in a hybrid, accessible way where the adviser is informed and empowered to supercharge the service with the right data behind them.

This article is a write-up from The Wealth Mosaic’s Swiss WealthTech Live Event 2022 to launch the Swiss WealthTech Landscape Report 2022. You can access the full report here.