Written by Peter-Jan Roose
The tidal force of the millennial generation will drastically change the landscape of private banking. Since, by 2025, some 75% of the workforce will be comprised of millennials, a massive intergenerational wealth transfer will take place. The foremost challenge that private bankers need to address is the lack of trust that millennials have in financial advisors. Millennials’ behaviour differs significantly from the previous generations. In fact, millennials are the first generation that has never needed to visit a bank branch to access financial services. Only 20% of millennials work exclusively with one advisor and generally only for 4 to 5 years.This, combined with a distrust bias towards large banks brands, points out that the days of intergenerational advisor loyalty are definitely over.
How to overcome millennials’ lack of trust?
To build a sustainable relationship with millennials and to keep up with their expectations, private bankers need to rethink their current way of interacting with clients. Millennials want to understand their holdings and investments. They seek around-the-clock information and pursue financial education. Increasing the frequency of interaction between the client and the bank will already build client engagement and loyalty. The best way, however, to persuade millennials towards lasting loyalty is personalisation.
Digital natives and their expectations
Millennials are digital natives. They have grown up with the digital way of transacting and investing, and are constantly connected. Presenting the right offer to the right client at the right time is of vital importance to deliver distinctive value. By analysing the client’s online activities and habits, private banks can come up with tailored portfolio alerts, product recommendations and investment ideas based on their client’s preferences.
Therefore, private banks need to embrace cutting-edge technology. An online platform is imperative in order to connect millennials with advisors, allowing them to interact with each other wherever and whenever they want, via any device. Millennials’ bond with technology also helps explain their confidence in robo-advisors. Nevertheless, and although robo-advisors outperform tradition advisors, millennials still desire a human touch. A hybrid wealth advice service would be most suitable for the millennial investors.
From value to values
These digital natives also want to connect with other investors to share ideas and investment strategies. Moreover, they prefer to be somewhat self-directed in their investments. For instance, social and environmental awareness plays a key role in their choice of investments, as millennials view these decisions as a way to express their values. So, the platform needs to incorporate social media and sentiment indices to assist in financial recommendations.
In conclusion, the millennial generation will strongly influence the private banking world. The trick is to know what their expectations are and to adapt yourself to them. In every possible way.
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