“Hey, Siri, how do I keep my clients?” Wealth management and digital engagement

By John Wise, Co-founder, CEO and Chairman, InvestCloud

Many wealth managers are wondering why millennials fire them after an inheritance. It’s a daunting problem with a very simple cause: millennials don’t see the value that wealth managers add. This is primarily due to a lack of empathy and resonance on the wealth manager’s part with younger generations.

There is a lot of money in motion right now. As Baby Boomers retire and Gen X’ers start planning for retirement, many are selling small businesses, downsizing their homes and starting to tap their retirement plan assets. Because of these dynamics, in the US alone, over $60 trillion of assets are becoming liquid and transitioning between generations now. This money is up for grabs.

The primary inheritors are millennials, and they are becoming a major presence. This generation represents approximately 30 percent of the US population. They are the largest age group demographic in the country and a close third of the investor base – around 30 million investors. This generation is already the next big thing in investing.

Millennial money

What are millennials going to do with this money? Well, it is not the same as previous generations, as the adoption of wealth managers is low among millennials. A recent report from Accenture shows that only 20 percent of millennial investors say they will work with an advisor exclusively. This is partly due to 57 percent feeling their advisor is only motivated to make money, and about one-third feeling their advisor doesn’t get to know them.

The result is devastating for the sector: up to six 6 out of 10 clients leave their benefactor’s advisor upon inheritance – i.e., the millennial fires the advisor upon receipt of the money. This is coupled with a distrust bias toward large brands – with an exception until recently for the tech platforms they use every day. This distrust is especially true of financial brands for a generation defined by the recent global economic crisis.

This is illustrated in that 70 percent of polled millennials would rather go to the dentist than listen to what their banks are saying. Worse still, a further 70 percent – across all age groups – say they would accept financial advice from a Google, Facebook, Apple or robo-advice platform instead of a traditional financial business. This is an engagement crisis for wealth managers.

So how do managers reverse this trend and engage investors?

Re-booting engagement – offline and online

Millennials are reported to have poor attention spans, a fear of missing out (FOMO) and a love of digital communication methods. While these observations don’t apply to all millennials, there probably isn’t going to be a mass exodus from short playlists and social media to steak dinners and golf.

Empathy is the key to better engagement – both offline and online. First of all, an obvious point: wealth management businesses need younger people to better engage with the latest generation of investors and to speak their language.

But empathy must be both in-person and digital. If in-person means connecting with investors in real life, then digital means relating it both in browser and through mobile apps. Digital is one of the saving graces for wealth management businesses – it makes them appear younger, and millennials clearly value digital, especially in finance.

Digital requirements

Any digital offering needs to meet certain requirements. Firstly, it needs to be available at any time, any place and via any device to give millennial clients power over how and when they interact with their wealth. Think of how the services they use every day work, such as Google, or how they choose to connect – i.e., a preference for mobile, app-based platforms.

It also needs to distinctly appeal to the user. This means it must be intuitive, involved and individual. The user experience needs to appeal directly to the client, all content should be unique to them and it must be worth their time to use the platform. When it comes to engagement, it’s not just other financial service providers that are the competition. Wealth managers are up against social media and entertainment streaming platforms as well.

Thought also needs to be given to specific functionality – what does your digital platform offer? The Accenture report mentioned above goes some way to calling out the specific requirements from this generation.

For example, 67 percent want a robo component and real-time tracking of transactions, payments and other financial data from their investment manager. A further 66 percent want a self-directed investment portal with advisor access, with 65 percent needing gamification for engagement and to help them learn more about investing. Those requiring social media and sentiment indices in the platform to help with investment decisions is around 62 percent.

Remember, though, that these offerings are not one-size-fits-all – they still require tailoring to the individual.

Using the best of both worlds

This doesn’t mean a complete shift to digital-only services. If a client has significant assets – and particularly as his or her life gets more complicated – a broader advice scale is needed, rather than simply having assets allocated to a handful of ETFs. The interaction of digital and human empathy is the key to effectively servicing these specific needs.

This is hybrid wealth management: offline and online services that work harmoniously together to create a better experience for the client, and greater levels of engagement for the manager. It means a better understanding of clients and therefore leads to more opportunities to expand the share of wallet, impacting the all-important bottom line.

So, how do financial businesses resonate better with millennials? Appoint younger people. Use digital. You can still be full service – helping manage life events like retirement planning, college planning, trusts, wills, parental long-term care planning and the like. But make sure you focus your business model on delivering from a place of empathy both in-person and digitally.

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