As wealth transfers to a younger generation, the demographic inheriting this windfall embraces change and disruption
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Editor — Commercial Publishing
The idea of wealth management today throws up some tricky issues for banks. On the one hand they like to promise a service with a personal touch, where customers can talk to a relationship manager they know and who knows them. However, the industry is now being forced to modernise to keep in touch with its clients, who are increasingly managing their money on the go.
Millennials make up about one-fourth of the global population today and over the next 30 years, an estimated $30 trillion (Dh110 trillion) of wealth will exchange hands from the baby boomers to millennials, according to consultancy PricewaterhouseCoopers. This will be, perhaps, the largest inter-generational wealth transfers seen in human history.
People in their 20s and 30s have grown up surrounded by technology and are comfortable dealing with a bank online or via a mobile device. Indeed, they often expect it as a matter of course.
“The way millennials approach wealth management is no different to their other lifestyle choices,” says Dr Saeeda Jaffar, Managing Director and Middle East Office Co-Head for Alvarez and Marsal Middle East. “They are technologically sophisticated and will therefore prefer a service that provides real-time information and execution through a digital and mobile platform, and which fits in with their schedules.
“While their needs are no different to anyone else, they are far more likely to embrace disruptive investment opportunities such as cryptocurrencies, initial coin offerings and artificial intelligence. In the case of artificial intelligence, millennials will also be far more comfortable interacting with a robo-adviser than a human one.”
Shalini Verma, CEO of Pivot Technologies, a digital banking consultant in the UAE agrees. “Millennials expect wealth management companies to offer technically sophisticated and data-driven digital platforms that allow them to build their own portfolios,” she says. “The platform should ideally leverage technologies such as Blockchain and artificial intelligence that add a degree of transparency and offer intelligent recommendations.”
Trust and digital engagement is another fundamental thing for this generation, says Verma. “Millennials like to make their own decisions by validating with their peers in their social network,” she says.
“The platforms should facilitate this decision-making process. Millennials are also prompting account managers to become consultants who offer simple, transparent and evidence backed advice to their young affluent clients.”