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Imagine inheriting a fortune – enough to make your generation the richest in history!
That's soon to be the reality for many millennials thanks to a massive wealth transfer from their parents' generation.
Research from estate agent Knight Frank suggests that those born between 1981 and 2000 are due a 'seismic' windfall over the next two decades thanks to the property assets accumulated by the generations that preceded them.
This means wealth managers have a key opportunity to build trust and good investment behaviours within this vital client group, especially during times of increased market instability.
But millennials aren't your typical clients. They've faced economic challenges, from the 2008 crash to the recent cost-of-living crisis. Many haven't been able to buy homes or save for retirement the way their parents did.
Why Wealth Managers need to cater to the New Generation
It's simple. Millennials stand to inherit a significant chunk of property and wealth in the coming decades. Adapting your wealth management firm's services for millennials secures your business's future as Baby Boomers pass the torch. Guiding millennials through market fluctuations now builds trust and loyalty for the long term.
But millennials need wealth managers who understand their unique situation. They may have a future fortune, but they also have student loans and rising rents. Wealth managers need to adapt their services to cater to these different needs.
How to Capture Millennial Clients
Speak their language:
Millennials are tech-savvy. It's vital that wealth managers take steps to understand the link between online engagement and financial advice and upgrade their capabilities in this area.
Almost all millennials (98%) own a smartphone and 25% spend more than five hours on them each day.
Offering digital tools and communication channels they're comfortable with will set your wealth management firm on the front foot when it comes to attracting this younger client base.
Wealth Managers which are leading the digital revolution in the current market are embracing initiatives such as user friendly client portals, developing intuitive apps and incorporating new communication channels.
These, along with AI, process automation, cloud computing, and machine learning capabilities which cater to the flexibility and online nature of engagement that millennials have become accustomed to will have a multitude of benefits for wealth management firms in the long run.
Focus on education:
Many millennials haven't had the chance to build wealth independently and may be new to the concept of wealth management.
Providing financial literacy resources, tailoring investment guidance to their circumstances, and addressing their concerns with educational resources will help to build trust and customer loyalty for the long-term.
Embrace responsible investing:
Millennials are much more socially conscious than the generations that came before them.
As a result, they want investment solutions to be ethical and meet Environmental, Social and Governance (ESG) criteria, all while minimising their portfolio’s environmental footprint.
In fact, 83% of millennial investors would be prepared to change their financial advisor if they didn’t possess ESG financial experience.
This means it's critical to highlight ethical and sustainable investment options that align with their social and environmental concerns.
Offer flexible solutions:
Millennials aren’t looking for financial investment products that are complicated or complex. They're tech-savvy and value transparency.
Wealth Managers can cater to their busy lifestyles with accessible services, clear communication channels, and innovative investments that are tangible and work in a way they can understand.
This younger generation calls for alternative ideas. Capital and private equity investments are popular, such as art, cars, cryptocurrencies and digital assets.
Build long-term relationships:
Although upgrading a client’s digital experience is key to attracting and retaining millennial investors, service, trust and integrity remain core elements of the private wealth industry.
Some aspects of financial planning and investments can be streamlined, but they still want the human touch when discussing their investments but through digital channels, like virtual meetings over face-to-face.
Forbes, in one of its latest insights reports which included a survey of Gen X and millennials, came to a similar conclusion. Among the key findings were that 42% of wealth managers believe that a mix of digital and offline ways of communicating is ideal, while 62% of clients surveyed said that the digitisation of wealth management services is good overall, but they still want to meet often with an advisor.
By helping millennials manage their current finances and plan for the future, rather than just focusing on the inheritance, wealth managers can build trust and position themselves to capture a share of this massive millennial wealth transfer.
Ultimately, it's a win-win – helping young people secure their financial future while growing your business. By adapting your approach, you can position our wealth management firm as a trusted partner for millennials navigating their financial future.
Our wealth management experts are here to help, whether your looking to progress your career, add to your team, or just discuss the current market. Get in touch today.
