While the ageing Baby Boomer generation attracts considerable
wealth management attention, understanding the different outlook of younger
population cohorts must be achieved for firms to stay in business, according to
Pershing, the financial services firm that is part of New York-listed BNY Mellon.

The so-called generations “X” and “Y” must be attracted and
managers must understand the different attitudes towards wealth, investment
and lifestyle that these population groups have, the bank said following a
recent client advisor council in the UK. The council is part of the firm’s
practice management program.

For definition purposes, Baby Boomers are aged 47 and above;
Generation X is aged between 32 and 46 and Generation Y is aged below 32, it said.

Among the differences noted is a much greater willingness to
embrace technology among younger people and a less trusting attitude towards
traditional banking models, Pershing said.

A number of banks and professional services firms have
explored the implications for the wealth industry from how different age groups
think about money and investing. In a report issued early in April, Bank of
America described wealthy investors between the ages of 18 and 35 as savvy,
independent and skeptical. But that firm also identified a “classic perception
versus reality scenario” as, contrary to some stereotypes, the differences
between these so-called millennial investors and their parents’ generation are
actually very subtle. 

In another study, Accenture found that investors between
the ages of 21 and 30, known as “millennial investors,” are more conservative
and less trusting of financial advisors than their older counterparts, Baby-Boomers and generation X. The younger generation are also more inclined to
consult other sources before accepting financial advice.

Time horizons

“Wealth businesses that are thinking about growth over a
longer time horizon than the lifespan of their current client base need to
carefully consider how they will attract and serve generations X and Y
investors,” Paul Bayliss, director and head of wealth and advisor solutions at
Pershing, said in the report.

“The key to cultivating relationships is to invest in
talent, technology and personalized approaches that can overcome the lack of
trust prevalent among these groups and position the client advisor as a useful
resource and straight-talking counselor. Such approaches will strengthen a
firm’s ability to attract a range of under-served investor groups and diversify
their client base,” he said.