In our previous article we covered how Millennials are set to inherit the greatest wealth transfer of our time. This group will receive between $30-$68 trillion from their parents, who are composed of Baby Boomers and Silent Generation. Millennials are also a more diverse group than mangers have ever advised, containing many women along with non-Western people and other racial minorities.
This, in itself, isn’t a problem.
But what will present challenges for managers is that Millennials have their own unique expectations when it comes to what they want out of wealth management.
In this article, we look at what these desires are.
Digital is non-negotiable
Unsurprisingly, and this point cannot be emphasized enough, many Millennials expect their wealth management experience to be, at least in part, digital. This is supported by the fact that fifty-percent of HNWIs think their main wealth manager should have better digital offerings.
In their digital engagement, Millennials often use tools like apps to arrange their lives, and more importantly, to track their progress across any number of fields and set well-being targets. This sets a baseline they also expect from their wealth management. When it comes to managing money, this manifests itself in the form of goals-based investing.
Millennials are independent
For Millennials, investments are a means to enable lifestyle objectives—buying a house, taking a few years off and travelling, or starting a family or a business. Getting to know these elements and why they are important are critical for Millennials because they drive trust in managers. This means that managers who primarily focus on the details of investments in discussions may not keep Millennials engaged.
Currently, many managers are failing short in this regard—less than a third of Millennials feel their advisors actually get to know them. Add to this the trend of Millennials conducting their own research and being independent in investing, they are also challenging their advisors, placing a premium on highly-customized advice, solutions, and those who truly listen.
Positive effects people and planet
Similarly, there is another major element advisors must understand about Millennials regarding what they want their money to enable: the impact money has on the planet and its people is of the utmost importance. Around one-third either exclusively or frequently put their money in vehicles that have ESG as guiding principles.
As far as the ESG data itself is concerned, the data solutions wealth mangers have at their disposal are catching up to demand, as both the completeness and reliability are growing. This gives managers the ability to give clients general indications of an investment’s ESG levels and specific information across important metrices like gender diversity, labor rights, and CO2 emissions—enabling Millennials to make informed investment decisions.
Wealth mangers have their work cut out for them
Meeting all these needs from Millennials requires a different approach to wealth management.
Not the least because wealth managers themselves are changing, causing possible disconnects between themselves and their clients.