How To Fix Wealth Management for Millennials
The Market for Wealth Management is a clustered one, with a huge number of independent advisories, a million individual funds and asset managers, all with ‘unique offerings’ but as a client what do you chose?
There are the big names where you rely on reputation, there are the boutiques that offer more personalisation, there are the disruptors in robo-advisors and algo funds at low cost, but no where has all of them, you have to sift through thousands of providers to find something that you think might suit your situation, the key thing is that, situations change, is there a one stop shop for this that works with you and your situation throughout your life without needing your own family office?
Not really.
This is leading to a critical issue, that people are chopping and changing wealth managers pretty frequently, 39% of HNWs say they plan to change their manager in the next 3 years, for an understanding of just how much that is, that is $21 Trillion changing hands. The next generation is even more volatile, with boomers 29% less likely than millennial clients to change provider according to EY’s 2019 Wealth management research report.
Another reason for this, the level of investment knowledge. only 19% of those self reporting with high investment knowledge are planning to switch in the next 3 years compared with 36% of those with low investment knowledge.
Millennials will become the most valuable wealth segment in the world soon, holding over $24 trillion in NIA . Yet it is not a secret that they are more conscious of the fact they do not know how the investment world works, 84% of them are actively seeking financial advice, more than any other generation. Some attribute this to being the survivors of childhood during the great recession, which I can most certainly understand as it is what drove me to study Economics. These managers, while providing what they see as a great service are failing a critical part in the sales process of Wealth Management, getting the client to understand their situation better, getting them to understand how to address their goals and what the products you place them in actually do.
We are sitting here on the generation currently popularising the ‘OK Boomer’ Meme, there is a frustration across the board with not being listened to by those who think they know better, its an age based rebellion about the condescending comments of older generations almost in tune with a feminist reaction to the comment ‘its okay let the men handle this.’ It’s hard not to feel a little irritated at least, and quite frankly ‘OK Boomer’ is the nicer of two word responses to such treatment.
When it comes to Wealth Management, its a similar response it seems, they want to have an eye level conversation and be valued not just talked at and placed in something.
As for other reasons why we switch, 56% of clients place pricing at a high Value or higher. No one wants to see the underlying assets do well only to have an AMC and Performance Charge wipe it out.
On top of all of this, they want to see whats going on, they want to know their manager, they want to know their bank. These are all incredibly fair concerns and questions for a client. It really comes down to value for money and seeing what you’re paying for.
So what do we do about it?
They have changing situations so you need a lot of available different products, advisers for different stages of life, they want to keep in touch regularly with their Adviser and their bank to feel appreciated and acknowledged, and they want to know what is going on and what the reputation of their bank.
In a Traditional model, that sounds like an alarmingly easy way to lose a hell of a lot of money as a business.
More Adviser Time = More wages, lower client volumes, expensive
More Advisers in general managing few clients= higher wages, expensive
More Products = Lower volumes per product = hard to negotiate lower charges on the funds with lower volumes heavy margin compression
There’s only one way to do this right.
Digitally.
Clients want to see their adviser? Video Conferencing
Less Travel time, less expenses, on demand so client feels a more trusted service.
Clients want to know whats going on?
Let them see their daily portfolio quotes in app, let them see whats going on and have the full breakdown there. Its already so easy if not tied to a legacy core ledger system and outdated tech stack.
Clients want to learn what they should be working on?
Webinars, social media content with tips and tricks, meet ups with the managers and fund managers to get a Q+A.
Clients want every product under the sun?
Easy, PSD2 just opened up every provider in the world, with a plug in anything at Blackrock, JPMAM we can get in seconds. As a platform providing advisory we can plug into any institution moving to the digital future. With my background in tokenisation, you want to invest in rare art? Great we can get you invested in art starting at 1 CHF, Want to invest in a Ferrari 250 GTO? same story. With our cross over amongst the biggest and most reputable providers, and into the newest and most innovative providers, there is no limit on what we can do.
With the massive efficiency of digital administration, the cost structures here plummet maintaining a fair margin on which to operate while providing incredibly competitive charges to the end clients.
You want quality?
I’ll give you the most beautiful app, the most exclusive card in the world, a concierge to find anything you might ever need short notice or just for that one crazy rare item and we offer exclusive client benefits at a number of major luxury providers, so if you want to get treated like royalty, they’ll do so because you are with 220.
All of that at EUR 20 a month for the nicest cards in the market, 1% fee on AUM up to 1.5% lower than the average Private Bank, 0.5% if you pick yourself or use the 220 Robo-Advisor, assets already invested just looking for a new home simply take our custodian fees at less than 0.2%. We are even working on establishing the ability to store crypto at partner institutions within 6 months of launch.
You want to know about the products we use?
Our advisers take the time in video conference to cover every part of your portfolio thoroughly and any recommendation made, our social media will drop hints and tricks about your finances and we will be running educational posts all over our blogs and socials.
You want to see our reputation?
On launch we will be an ironically social private bank, a large number of our Pre-Registered users are influencers, listen to the community and what they will say about us. Social media is key as a verification of legitimacy to a younger generation. To see people they know working with us, its like a close friends referral to millions at a time.
You can fix wealth management, you can reduce the churn rates and you can provide value, but to be second to none takes some time, but as the name suggest, we at second to none are building the best offering in Wealth Management.
If you want to hear more about the future of wealth management make sure to stay up to date with our newsletter as we prepare for launch here!
