By Staff
Nearly 37% of wealth management advisors struggle with navigating the wealth transfer due to a lack of understanding beneficiaries’ needs, according to a new survey by Capgemini.
It found, while more than half (58%) said it was challenging to build relationships with next-generation high-net-worth individuals, just 29% said they’ve tailored offerings for this demographic.
What’s more, a majority (81%) of next-gen HNWIs said they plan to replace their parents’ wealth management firm within one to two years of receiving their inheritance. They cited lack of preferred digital services (46%), unavailability of alternative investments (33%), and inadequate value-add services (25%) as reasons for why they were considering the switch.
Roughly two-thirds (67%) of advisors said they’re turning their focus on engaging and retaining next-gen HNWIs. The survey found this demographic favor a long-term investment outlook, making alternative investments such as private equity and cryptocurrency more attractive to them. Indeed, a majority (88%) of advisors noted next-gen HNWIs show more interest in the alternatives asset class than baby boomers. However 66% of advisors noted their firms lack investment options in emerging asset classes, such as crypto assets.
Overall, 15% of HNWIs’ portfolios were in alternative investments, including private equity and cryptocurrencies. However, millennial HNWIs and those from generation Z (61% combined) were allocating capital to higher-growth asset classes and niche product offerings.
Half (50%) of next-gen HNWIs said they’ve made passion investments out of personal interest and a desire to optimize returns. These respondents were interested in wealth management solutions in global, diverse markets, with more than half (56%) of advisors saying this group showed more interest in offshore investments than investors who are set to pass on their wealth.
As well, 50% of advisors indicated their lack of capabilities in emerging market regions – Singapore, Hong Kong, UAE and Saudi Arabia – will lead to clients switching wealth management services. Steps firms said they were taking to expand offshore capabilities are establishing independent operations, partnering with local entities, or acquiring local firms.
Nearly three-quarters (71%) of advisors also noted next-gen HNWIs prefer digital-first services. By contrast, baby boomers prefer face-to-face meetings over video calls, with 78% of their business calls occurring in-person. Despite next-gen’s preferences, 56% of advisors said their firms lack the necessary seamless omnichannel experiences and self-serve digital platforms.
