Senior executives from regions including Asia speak exclusively to this publication on what they see as top priorities for wooing younger clients, an essential issue in maintaining a future business pipeline.

Senior executives from regions including Asia speak exclusively to this publication on what they see as top priorities for wooing younger clients.

Among all the strategic challenges wealth managers are now grappling
with, one subject continues to grab headlines and has become an almost
ubiquitous subject for discussion across the industry: how to attract
and retain the business of younger clients. But despite all the column
inches and debate dedicated to this topic, it seems that the wealth
management industry has yet to arrive at a magic formula for serving
this segment – and this is as it should be, senior executives recently
told this publication in a series of interviews.

Just as with the “female segment”, it would be reductive in the
extreme to attempt to target younger clients solely as such. That said,
there are some characteristics and preferences firms should certainly
bear in mind when devising their strategies, and the first of these is a
global outlook, explained Money K, global head of Next Generation at
Citi Private Bank.

K, who oversees Citi’s global efforts to educate and engage the
children of wealthy clients (and who is based in Singapore), notes that
the inheritors of tomorrow are often incredibly cosmopolitan and this
often colours every element of their characteristics and preferences;
next generation clients in China are often very much English-speaking,
for example, he points out.

“They [next gen clients] could be born in country A, like China or
the Middle East and have a permanent residence in another country; they
may have gone to boarding school in one country, studied at a university
in another country and then taken an MBA in yet another,” he said.
“They are exposed at a very early age to a variety of markets and
countries, so as a result they tend to be quite global in their
orientation.” As such, not only will the children of today’s H/UHNW
clients have social networks which span the globe, they will also
probably feel more at ease in investing outside of their domestic market
than their parents ever did.

This global outlook is by no means restricted to those set to inherit
wealth however, as today’s younger entrepreneurs are highly likely to
be doing business on a global scale and taking full advantage of the
international connectedness which is the hallmark of the modern age.
Indeed, for today’s booming numbers of younger technology entrepreneurs,
regional borders have been rendered all but meaningless by the
supra-national nature of the internet.

Social conscience

This global outlook is not however at the expense of a real sense of
community, albeit a global one, and it is indeed the case that the
younger generations seem to be generally more concerned with social
conscience than those which went before. While philanthropy is by no
means a new trait among the wealthy, the younger generation is marked by
a broad-based earnestness about social conscience which goes far beyond
just donating to good causes, explained Juliette Johnson, executive
director of Coutts Institute (a part of the bank’s offering aimed at
helping clients with the governance of wealth, family business dynamics,
philanthropy and so on).

Chiming with various studies on the subject, she agrees that younger
clients - both those who have/will inherit and those who have made their
own fortunes - are “generally more socially aware and want to get more
involved philanthropically”, but she points out that this social
conscience also extends to the companies they want to do business with. A
“seismic shift in priorities” has occurred in her view, meaning that
not only do younger clients “want to be working with values-driven
businesses” but that they are also concerned with much more than just
making money. “It’s about making a difference in the world and having an
impact,” she said.

Both K and Johnson believe that wealth managers need to bear this
“seismic shift” in mind with all elements of their business practices
with younger clients. It might seem a small point but - in the interest
of “greenness” - both caution against bombarding younger clients with
paper-based documents where it can be at all avoided, whether that be
for educational/promotional purposes or financial paperwork.

“They don’t want to receive reams of paper…they want it to be more
digital because they want to be more socially responsible and aware,”
Johnson said, adding that many of today’s start-up businesses have the
interests of environment and community at their core. In recognition of
this, Citi, - like several of its peers - distributes digital
educational materials to seminar attendees straight to their tablets,
eschewing hard copies completely.

But of course younger clients’ focus on digital goes far beyond
saving trees, and it seems that digital channels are in fact the battle
ground on which wealth managers will have to fight for the business of
generations X, Y and Z. Here again, the sophistication of today’s
younger clients needs to be front of mind and gimmicks are simply not
going to be enough, according to Stuart Cummins, managing director at
Barclays Wealth and Investment Management.

Technology

When asked if whizzy technology - like, for example, the Augmented
Reality apps offered by some Asian banks – are the answer to attracting
younger clients, Cummins replies firmly in the negative. Here, he
believes there is a risk of flawed logic taking hold, that is apps and
such like being developed as an end in themselves. With apps, as with
all other digital channels, he believes that it is the user experience
which is actually the key, i.e. whether the tool makes it easier for the
client to achieve what they want to achieve through partnering with a
wealth manager. Firms should focus on what their core proposition is,
rather than trying to be “all things to all people”, one might say.

“It’s very easy to think that the app itself is important, but it’s
not, it’s how easy it makes it for the client, or the client of
tomorrow, to execute what they want to execute,” Cummins said. “Apps are
not one thing for everybody, they typically do a very simple thing
really well and that’s why people have apps all over their phone which
they use for all sorts of things.” In his view, “It’s about doing the
basics really well and really slickly with a great user experience.”

Here we could also consider the very different relationship younger
people have with brands and the fact that it is incredibly hard for
financial institutions to inspire emotional resonance in clients.
Scorpio Partnership’s work on “brand love” shows that wealth managers
are consistently in the doldrums on this metric, and while they should
certainly continue to strive for some kind of emotional connection, they
are probably never going to attain the level of attachment which the
young have to the likes of Google and Amazon.

That said, wealth managers can certainly aspire to the kind of
intuitive, helpful user experience which these digital powerhouses
offer, said Cummins. The intelligent use of preference information is a
case in point here, and it is this laser-sharp focus on what users
really want and need which has fuelled the meteoric rise of these brands
over a relatively short time frame. “As an industry we need to
recognise that the younger client base will respect a Google, for
example, over a perhaps more established brand because that’s who they
use all the time and that’s who they go to for their information…with
Facebook that is how they navigate their social environment,” he said.
“We need to make sure that we are connecting with that population in
such a way that they see us as fulfilling a critical function for them.”

For Johnson, the starting point for wealth managers targeting younger
clients is to “recognise that the way the next generation do things is
different from the way their parents do things”. To her mind, the
question then is: “How do you connect to an audience who are much more
focused on digital, who want things quickly, who want information at
their fingertips and who are using mediums like social media to build
their networks and relationships?”

This is a multi-faceted question indeed, and just one of many which
firms are currently working through; another is whether younger clients
do in fact prefer to be advised by someone closer to their own age. This
seems to be quite a contentious issue.

Younger clients, younger advisors?

It would be easy to assume that all younger clients prefer working
with younger advisors, finding it easier to relate to someone of the
same generation who is immersed in the same social and technological
milieu. Banks are certainly aware of the need to build a younger
workforce and some, like DBS in Singapore for example, have consciously
tried to create modern, Google-esque working environments to help them
in their efforts, for example. Meanwhile, wealth managers around the
world are increasingly seeing university campuses as hunting grounds in
which to find fresh talent.

But while wealth managers should certainly be giving younger clients
the option of working with someone close to them in age, it would be a
mistake to assume that this is always what they want or need,
said Philip Harris, head of UK private clients at RBC Wealth Management.
Largely, younger clients might find it easier to relate to a younger
advisor but automatically assigning them one might well be a mistake, in
the same way that would be immensely patronising to automatically
assign a female client to a female advisor since people connect on a
whole range of variables other than gender or age.

“These people [younger clients] aren’t stupid and so it’s all about
getting the right people around them and that could well be someone who
is old enough to be their dad,” said Harris. He believes that cultural
alignment and emotional intelligence are actually the most important
factors, pointing to the fact that entrepreneurial spirit is ageless and
that it may well be that a younger client appreciates the business
experience which comes with grey hairs.

Harris advocates simply asking all clients, “Who do you want to deal
with? What kind of person would you like?” In fact, he recalls that in a
previous role he held a “beauty parade” of six different bankers for a
client to choose from and that “this went down particularly well”. This
common sense approach is one various senior executives have spoken to WealthBriefing
about in recent years and arguably marks the continuing “humanisation”
of financial services to take more account of “soft” factors.

“I think it’s really incumbent on the management of a firm to
recognise that clients are humans and have wishes and likes and
dislikes,” said Harris, adding that these preferences have to be dealt
with as swiftly as possible. This is of course true for clients of all
ages, but for the Facebook generation in particular a firm which pays no
heed to their “likes” will rapidly get the thumbs down. And with their
large, global social networks and the plethora of information at their
fingertips, younger clients will have no shortage of ideas when it comes
to other providers.

Research indicates that younger clients are far less loyal to their
wealth managers than older ones and are ready to jump ship to a provider
they see as having a better offer without qualms - but it would be
simplistic to see this as flightiness or perhaps even cynicism. Instead,
wealth managers should see it as a sign of just how discerning younger
clients are, according to K. “They are the internet
generation…information is easily available through the internet so what
they are looking for is more real insight,” he said. “It’s about the
intellectual capital that differentiates one bank from another.”

So, we could say that top-notch insight, a slick user experience,
real choice of advisor, globality, emotional intelligence and social
conscience should be top of mind for firms targeting younger clients.
But while that may be quite a shopping list, not one of those qualities
will be anything really new to a modern wealth management firm – nor are
they characteristics which speak solely to the young.

Happily, firms which can convey that they offer all these things are
likely to attract new business across the board, and so while the growth
in young wealth has inspired an element of head-scratching in the
industry it will ultimately be for the good of all ages of client. And
what’s not to “Like” about that?