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How Wealth Management Firms Should Prepare for the Great Wealth Transfer

a new generation of investors

No-code can help wealth management firms keep up with the evolving digital needs of the younger demographic. 

If you work in wealth management, you’ve likely already spent a lot of time thinking about the trajectory of wealth on a national scale. Since the ‘90s, the baby boomer generation has held a substantial share of American wealth—a share which increased from 20% to nearly 60% over the past three decades. Boomers currently hold the majority of wealth in the country and represent the core customer base of the wealth management and financial planning industries. 

However, all of this is poised to change dramatically as boomers begin to pass their accumulated wealth onto their Gen X and millennial heirs. In what financial experts are calling the “Great Wealth Transfer,” an unprecedented $68 trillion is estimated to be transferred between generations in the next 30 years. Simultaneously, millennials are also creating their own wealth—they’re expected to control over $20 trillion in global assets by 2030. 

To win over a new generation in the years to come, wealth managers will have to refocus their efforts, explore new digital channels, and learn everything there is to know about a younger customer demographic. 

Meeting Millennials Where They Are

More than “The Great Wealth Transfer” itself, wealth management firms need to be wary of how exactly millennials will behave once they acquire said wealth. Rather than sticking with their parents’ trusted wealth management firms, studies suggest that at least 80% of millennial heirs will seek out a new financial advisor after inheriting their parents’ wealth.

Rather than sticking with their parents’ trusted wealth management firms, studies suggest that at least 80% of millennial heirs will seek out a new financial advisor after inheriting their parents’ wealth.

To paraphrase Ai Long Toh, a relationship manager with RBC Wealth Management, boomers trust their financial advisors implicitly—but the younger generation is choosier and more prone to investigate. Millennials have access to an infinite well of financial information online and aren’t afraid to seek out a second opinion. As the younger generation continues to grow into their own wealth, inherit their parents’, and look for new firms to manage their money, the wealth management space will inevitably become incredibly fluid.

Ric Edelman, founder of one of the largest Registered Investment Advisors (RIAs) in the country, sees this as a watershed moment. “If it’s true that the vast majority of [heirs] will find new advisors,” he says, “it’s a message to the financial services community that they are failing to deliver the services to retain that business.” With a staggering amount of wealth that will soon be up for grabs, it’s critical for wealth management firms to start identifying how they can better entice a younger demographic. 

An Industry Unprepared

The fact is that many wealth management firms struggle to connect with a younger customer base simply because they’ve never had to. Throughout the longest-running bull market in history, the industry has had no shortage of high-net-worth boomer clients for the industry to serve—meaning there’s been little incentive to update systems or pursue innovation that might appeal to a younger demographic. However, this commitment to the status quo puts financial advisors in a precarious position. 

In a rapidly changing industry, past performance is not always indicative of future success. Boomers and millennials are vastly different demographics that tend to want vastly different services. For example, wealth management experiences geared toward boomers are often characterized by personal advice. On the opposite end of the spectrum, millennials tend to be wary of listening to a lone voice of authority, and are willing to do their research to ensure they’re as informed as their advisors.  

Millennials also want the convenience of mobile applications, robo-advisors, and other digital tools and channels. A recent Accenture study shows that 67% of millennial respondents want computer-generated recommendations as a basic component of their wealth management experience—as opposed to only 30% of boomers and Gen Xers. Similarly, 63% want a mobile platform that connects them directly with their advisors, compared to just 27% of their older counterparts. To participate directly in their wealth management experience, 65% of millennials even report a desire for apps that use gamification to help them stay engaged with their portfolio. 

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Given these statistics, it’s clear that winning over millennials will require firms to revisit the ways they operate and interact with their customers. If wealth management firms don’t make adjustments (and fast!), they stand to lose out on billions of dollars in new business in the years to come.   

Turning a Generational Shift Into an Opportunity 

The good news is that the “Great Wealth Transfer” isn’t all doom and gloom. In fact, there’s an opportunity here for savvy wealth management firms to rise to the challenge and differentiate themselves in a way that wins over an even larger share of the market. Many financial advisory firms today resist change because of the high compliance and technology costs involved in digital transformation—but no-code eliminates these pain points altogether. 

Winning over millennial customers won’t be as simple as throwing a mobile app on top of the existing experience—it will require a full reinvention of the customer journey, from onboarding to requesting documents. Unqork’s pre-built use cases and drag-and-drop components make it easier than ever to build seamless digital experiences that will help you unlock your competitive edge. From there, the templatized nature means you won’t have to face long development timelines and debugging sessions for any future changes. Instead, Unqork no-code allows you to quickly adapt to millennials’ preferences as they shift, from creating self-service products to intuitive customer portals.

To get ahead of the Great Wealth Transfer before it happens, wealth management firms need rapid application development methods that free them from legacy maintenance and allow them to innovate. Learn more about how you can prepare yourself to win over millennial money-makers with Unqork through a personalized demonstration, or check out some of our other articles about wealth and asset management