The role of customer experience in wealth management strategy

New consumer groups offer a great deal of growth potential for wealth firms

The role of customer experience in wealth management strategy

Globally, there has been a significant increase in wealth over the previous year, with the number of high-net worth individuals (HNWI) rising by 7.8% and 8%, respectively. To get a slice of the growing pie, wealth management companies will require new and enhanced methods of offering personalisation to enhance client experience, according to a new report.

In its latest World Wealth report, Capgemini said firms are tightening their focus on emerging market sectors, including millennials, tech-wealth HNWIs, and women in wealth. Most WM enterprises don't offer segment-specific goods and services, it said; just 37% of them do so for women, 22% for millennials, and 53% for HNWIs with high levels of technological wealth.

These new customer sectors, which have a strong potential for development and need specialized knowledge and capabilities, are what WM businesses are vying for in terms of mindshare.

Over the next two generations, Capgemini said, women across the income spectrum will inherit 70% of the world's wealth, and will likely control two-thirds of family wealth by 2030. Because they lack the necessary resources or education, women feel less confident in their primary wealth manager and their capacity to create or increase wealth over the next 12 months, according to Capgemini’s HNWI poll.

Women look for excellent service, transparency in costs and offerings, data privacy and security, and other factors when choosing a main WM provider. Additionally, they expect value-added services like tax advice, estate preparation, legal assistance, and retirement planning. They also value connection, significance, a legacy for the future generation, and making a difference from an environmental and social standpoint.

Meanwhile, Capgemini said future HNWIs and millennials are looking for digital involvement, education, worth, and transparency. Younger generations frequently change advisors and display significant cost-consciousness; as a group, they’re partial towards transparent pricing and hybrid modes of advice.

Tech-wealthy HNWIs – those who amassed their fortunes through ventures in the technology sector – expect their wealth management provider to offer active investment, personalisation, and unified services.

With a combined net worth of US$2.5 trillion, the number of tech billionaires rose by 51.5% in 2021. For unified services and a better customer experience, they are inclined to work with state-of-the-art companies and family offices. Sixty per cent of HNWIs in the tech sector prefer family offices over big banks or WM companies.

LGBTQ+ HNWI clients, meanwhile, seek inclusive advisory services to enable them to live their best financial lives. This approach encompasses the entire financial lives of LGBTQ+ HNWIs, from investments to tax strategies, estate planning, charitable and legacy planning, and risk management. WM firms have opportunities to better meet the life-stage needs of LGBTQ+ individuals and families.

Due to the increase in middle-class individuals joining the ranks of the mass affluent category, mass-affluent investors, which are generally clientele with investable assets between US$250,000 and US$1 million, have significant growth potential.

Citing figures from Global Data Wealth Markets Analytics, Capgemini said the US mass-affluent wealth segment may represent more than US$47 trillion in value by 2025. Most businesses overlook this wealth band, but WM organizations would do well to seize this market segment early in their life phases and nurture them within their ecosystem.

The impetus to focus on these emerging customer segments will only grow more pronounced, the report said, as rising regulatory requirements, disruptive business models, and fierce rivalry from non-traditional challengers like Big Tech drive instability and change for the wealth management industry.

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