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Why serving “the millennial client segment” is a myth

Tuesday, March 21st, 2017

Our new report on the millennial generation “Reaching Millennials - the Next Big Opportunity in Digital Wealth Management” reveals why wealth managers who rely on a “one-fits-it-all” strategy will inevitably fail to attract younger prospects. Millennials or members of Generation Y are born roughly between 1981 and 1997 and face a range of prejudices that are fueled by an increasing number of generalizing articles, studies and speeches that gain a lot of attention on social media.

The aim of our report is to show that it is no option to perceive millennials as a homogenous group that can be targeted with a uniform strategy solution. Hence, we conducted sixteen in-depth interviews with very different representatives of this generation to find out if there are common values and opinions. Analyzing the information shared in the interviews, we could group them together into five archetypes that show huge differences in their psychological traits, behavior, attitudes towards wealth and their communication preferences. Based on this, our report works out a comprehensive set of strategies that empowers wealth managers to survive the generational shift.

Why should “millennial strategies” differ from traditional ones?

Many wealth managers probably ask themselves why it should matter at all to think about targeted strategies for younger client segments. There are many reasons which are discussed in our report but the main aspects include:

- They are becoming the major target group. Millennials already outnumbered the huge generation of baby boomers and it is estimated that they will inherit trillions of dollars in the next decades as older generations pass on their wealth to them. This shows that today’s millennial generation is actually the client segment wealth managers need to focus on to ensure future success.

- Expectations are changing in many ways. Digitization, technological development, alternatives on the financial markets, transparency and sustainability, the diversification of communication – there are so many factors disruptively changing consumer needs and expectations across all industries and, thus, the perception of how good a financial service is.

- Financial interest and the importance of transparency raise the bar for wealth management services. Re-building the trust that got lost during the past decade is a challenging task and combined with an increasing demand for transparency and sustainability, the need for an open communication and information provision is rising. Additionally, our interviewees turned out to be interested in financial topics and seek to grow their knowledge – their wealth manager should respond to this interest, as well.

What is the current situation in wealth management?

Many wealth managers and private banks host regular events to which they invite their clients’ children and younger prospects. Some events aim at growing attendees’ financial knowledge. Others focus on family business succession. Whatever the case, most wealth managers lack a digital component that enables participants to access related material such as webinars or further information. However, we are convinced that wealth managers who put strong efforts in supporting young people’s first steps into building their wealth must think much broader than just meeting them and inviting them to interesting events. This is a great start but nothing more. We found six very different examples of wealth managers who excel at attracting millennial clients through a digital component. Our report presents them in detail and works out valuable learning points for their competitors.

 
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