Nowadays, the average investor is in their 60’s. This means that the largest wealth transfer in history – from baby boomers to later generations, such as Gen X and millennials – has already begun. As Gen Xers hit their prime earning years and millennials enter the workforce, they are taking centre stage as the new generation of investors.
In many ways, baby boomers lived a more straightforward investment life in their prime years. These up-and-coming generations, however, are different. They are global, tech-savvy, educated and self-directed, not as focused on owning real property, environmentally conscious, open to philanthropy and less tied to traditional employment relationships – they seek work-life balance and dislike micromanagement. Also, women are controlling wealth more than ever before.
As many of this group reach the peak of their careers and earning years, they are becoming increasingly relevant to advisors. Since they are more digitally connected than ever, they need their wealth managers to give them 360-degree advice and require much more than just onboarding and periodic reviews.
To be able to connect to new investors, advisors need to treat every interaction as a chance to go deeper and gain a more thorough understanding of their clients’ lives. They should think of client lifecycle management (CLM) as continuous onboarding. The objective of CLM is to create a better service around onboarding, account maintenance, service requests and inquiry handling. The aim is to positively influence the progression a customer goes through during the buying lifecycle, consisting of multiple stages – awareness, consideration, purchasing and usage – that ultimately lead to sustained customer loyalty to a product or service, according to Soffront.
“If we think broader, even offboarding should be considered as a chance for future onboarding; by providing an outstanding customer experience, we can use relevant data to advise, for instance, on the best time to close accounts. The level of service that clients receive should not be any different even if they are being offboarded,” says Alessandro Tortelli, Solution Practice Lead, Appway.
“Advisors can already begin to onboard a current investor’s child by connecting with them now. It’s critical that financial institutions focus on the full lifecycle of the client, starting well in advance of them actually owning wealth,” Tortelli adds.
Onboarding the next generations starts with a two-way education. First, advisors need to educate potential clients on the value that they are offering and the implications that wealth will bring to them. Second, they need to educate themselves on their clients’ needs, wants and goals. They can do so by asking their clients a series of questions that are not specifically related to banking products and/or services.
“Failing to do this as part of managing the client lifecycle journey is already leading to asset leakage; many traditional wealth managers are losing traction as their clients choose to diversify their investments towards newer, more modernized entrants,” Tortelli notes.
Gamification is another (yet not fully exploited) way to connect and better understand investors. Credit card companies, for example, have found a smart way to engage people and influence consumer behaviours. Due to the rewards systems they have put in place, people want to swipe their credit cards more than ever before instead of using cash in their transactions, while the credit card companies are able to collect and analyze important data.
“All of this boils down to one important yet simple idea: advisors must holistically understand and address diversified customer needs to drive growth,” Tortelli says.