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Beyond the Numbers    Financial Advisor eNewsletter


Demography and technology are converging to revolutionize the wealth management industry in the coming decade. 

Unprecedented global demographic forces are helping create a “golden age” in financial services. Over the next five years, household assets under management are forecast to increase $50 trillion in the top twenty-five markets, according to a new study by Roubini ThoughtLab. Behind this massive increase are global population aging, increased savings driven by rising longevity, and rising middle classes in emerging markets.

At the same time, new technologies, ranging from fintech and robo-advisors to social media, are changing the ways wealth management firms are able to engage and retain clients. These technology innovations are forming new battlefronts as advisors vie for investors across emerging generations of investors.

The stakes are high as both retirement savings and inheritance transfers escalate. The wealth transfer to Millennials in the U.S. alone will total $30 trillion over the next several decades, according to analysis by Bank of America. Half of investors across all generations indicate they are willing to switch providers. But Millennials will prove particularly fickle. Two-thirds (65%) of Millennials say they are willing to change providers, compared to 53% of Boomers and just 42% of Generation X, according to the Roubini ThoughtLab global study.  

Technology will be key to unlocking the Millennial potential. 53% of Millennials say they will have a preference for fintech in the coming years, compared to just 32% of Boomers. Steve Scruton, President of Broadridge Advisor Solutions, believes that to capitalize on the Millennial market, providers must:

1. Leverage social media and online collaboration to build brands and communications channels that resonate with Millennials.

2. Use advanced analytics to identify and engage Millennials with a high probability of becoming wealthy.

3. Use technology to build family relationships and lay the groundwork for transition plans.

4. Create mobile and web-based investor portals to both respond to investor needs and gather customer data.

5. Implement aggregation technology that enables advisors to take a 360-degree view of a family’s assets and planning needs.

However, while there is much discussion about Millennials, wealth advisory firms are now training their focus on another generation that, until now, has been often ignored: Generation X. As Gen Xers escalate savings and investing for their retirement, 89% of wealth management companies say they are targeting Generation X for near-term growth, while significantly fewer say they will be targeting Millennials (79%) or Boomers (81%).

Regardless of which generation advisors are targeting, technology will play a major role in meeting the unique needs of each generation and lifestage. “Individual factors are of great importance when you’re talking about retirement and how you should be invested,” says Bob Reynolds, President and CEO of Putnam Investments.  “One of the great promises of technology is the ability to tailor products and potential solutions to individuals and their financial advisors in a way that meets their unique situations.”

This article is a publication of Life Stage Insights, a client discovery and engagement system for financial advisors.

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