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Wealth managers need to understand diversity of millennials, says report

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There is general inadequacy in the digital offers provided by wealth managers to members of the millennial generation that come from an affluent or high-net-worth background.

That’s is the main finding of the report “Reaching Millennials – The next Big Opportunity in Digital Wealth Management” by Swiss research company MyPrivateBanking.
 
For the report, MyPrivateBanking conducted in-depth, face-to-face interviews with wealthy young people and young people beginning their working lives with 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,” says Carmela Melone, senior analyst at MyPrivateBanking.
 
This is one of the main reasons for wealth managers to keep an eye on younger client segments.
 
“Our interviews reveal their desire for professional advice from wealth managers they trust, but also a high dissatisfaction with the customer service and outdated digital offerings from their current financial institutions,” says Melone.
 
As a result, the majority of our interviewees for the MyPrivateBanking report stated that they are considering changing their bank or in some cases had already moved to a competitor – often, to a digital one. In their search for digital offerings that wealth managers have tailored to the millennial generation, the MyPrivateBanking analysts found that there are only a very few examples of notable initiatives to connect digitally to the millennial generation.
 
ABN Amro, for instance, offers its clients’ children meetings and live discussions on topics such as investing, wealth transfer and philanthropy combined with webinars, e-learning modules and an online-platform to stay connected after the seminars. Likewise, BNP Paribas Next Gen Club connects an international community of its clients’ children at offline events and via a private mobile app with topics aimed at growing the users’ financial knowledge and enabling participants to communicate.
 
As one of the main obstacles wealth managers have to overcome if they really want to reach and engage the millennial generation, MyPrivateBanking identifies in the report the false assumption that millennials are a homogenous, demographic group.
 
“There is no ‘millennial generation’,” says 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.”
  
MyPrivateBanking categorises millennials from an affluent or high-net-worth background into five main archetypes, each of which has very specific psychological and behavioural patterns. These archetypes differ in their expectations for wealth managers, level of financial knowledge and satisfaction with their current wealth managers. As a consequence, MyPrivateBanking lays out a series of recommendations for each sub-segment of wealthy millennials that wealth managers should carefully target at those segments.
 
“Wealth managers open to highly targeted offline and online offerings that acknowledge the mobility, social networking and corporate responsibility demands of millennials can expect a significant inflow from assets,” says Melone. “Assets coming straight from the wealth managers ignore the next generation of clients altogether or tar them all with the same brush.”

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