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EXCLUSIVE: Millennials Want Digital Offerings, But One Strategy Does Not Suit All - Report

Eliane Chavagnon

14 March 2017

Many wealth managers could be missing out on - or losing - business with millennials because they aren't offering individuals in this demographic a truly targeted digital advice and service offering, according to global report launched today.

MyPrivateBanking Research's report, entitled Reaching Millennials – The next Big Opportunity in Digital Wealth Management, also notes that although millennial investors share many common psychological and behavioral traits, there are sub-segments within this cohort of 20- to 35-year-olds that are seeking a certain type of wealth management experience. The findings are based on interviews with young, wealthy individuals, as well as those that are starting their careers on a “considerably high wage”.

“Millennials will double their net worth within five years, will inherit a lot of money, and many will start their own businesses,” said Carmela Melone, a senior analyst at the Switzerland-based firm. “Our interviews reveal their desire for professional advice from wealth managers they trust, but also a high dissatisfaction with the customer service and out-dated digital offerings from their current financial institutions.”

Most interviewees reported that they were in fact considering changing their bank - or had already done so - in search of a level of service that more closely mirrors their needs and preferences, MyPrivateBanking said. Worryingly, though, the firm found just a few examples of “notable initiatives” used by industry players to connect digitally with millennial prospects and clients.

Among them, ABN AMRO was praised for offering clients discussion opportunities for younger family members on topics including investing, wealth transfer and philanthropy, as well as webinars, e-learning modules and an online-platform to stay connected after the seminars. Similarly, BNP Paribas stood out with its Next Gen Club, which is designed to connect children at global offline events as well as privately through a mobile app, and encourage participants to share their thoughts and knowledge.

In many other cases, however, such initiatives were not clearly targeted and had no strong appeal to various millennial types. Indeed among the report’s most significant findings, MyPrivateBanking said it has identified a common “false assumption” among wealth managers who perceive millennials as a homogenous group.

But in reality there is no “millennial generation”, according to Melone. “The strategic thinking of wealth managers must break free of the notion that one strategy can target a whole generation - this is way too simplistic and ultimately will fail,” she said.

The firm has listed five buckets representing the mindset and certain key attitudes found among different types of affluent or high net worth millennials. These are:

-    The lamb ;
-    The relaxed dreamer ;
-    The rational ;
-    The expert ; and
-    The bon vivant .

The firm argues that individuals in each category tend to exhibit specific psychological and behavioral patterns. These “archetypes” differ, understandably, in their expectations of wealth managers, as well as in their level of financial knowledge and satisfaction with their current providers. MyPrivateBanking therefore believes that those wealth managers who understand and successfully cater to each investor sub-segment will be best-placed to win business from those individuals.

“Admittedly, generalising might be a reasonable way to give a very rough idea of how recent economic, technological and political events and developments might have affected the way people live and think today,” the firm explained in the report. “However, to derive concrete insights and implications for wealth management companies in how to tailor marketing strategies, it is necessary to dive deeper.”

To use one example, digital banks are “highly interesting” for lamb millennials, but only if they can also speak to an advisor on the phone or through video messaging. As these individuals are just starting to develop an interest in financial topics, the report urges wealth managers to “start early” and pique these interests through digital material that answers basic questions about investments, markets and other financial issues. Services such as in-app budgeting tools are also highly sought after among these individuals, it noted.