Press

GENERATION SCEPTIC: MILLENNIALS UNCONVINCED OF WEALTH MANAGEMENT OUTCOMES

LONDON – Almost one third (29%) of the UK’s HNWIs under the age of 40 believe that recommendations from their wealth management firm have not been in line with their risk tolerance, according to new research released today.

This finding – which compares to a global average of 17% – is drawn from Generation sceptic: Meeting the millennial standard, the third report in the 2015 Futurewealth series by NPG Wealth Management, SEI (NASDAQ: SEIC) and Scorpio Partnership.

The research takes into account the views of 3,113 investors from around the world with an average net worth of USD2.7 million and asks clients whether they believe their main wealth management firm has delivered on eight key outcomes.

It finds that the younger generation are less positive about the delivery of these outcomes than their older peers but that the weakness points vary across different markets. Under 40s from the Americas are most satisfied with their current service provider but 23% of them still say they have not received explanation about how investment performance has been generated. In Europe, performance on this outcome is marginally better, with just 20% of under 40s stating their financial provider had under-delivered in this area.

For both the under 40s in Asia-Pacific and the UK, explanation about how investment strategies can meet their financial goals has been weak with 29% and 26% respectively stating that this outcome had not been met.

Next generation clients are more sceptical about the benefits of regulation. Over one third of those under 40 feel that guidance will actually become less personal as the regulator takes further charge, compared to 26% of the over 60s.

“Wealth management firms need to be mindful that younger clients are not as satisfied about the service delivery as their predecessors” commented Marc Stevens, CEO of NPG Wealth Management. “The implication is that institutions will need to work harder to understand the dynamics of this client group to ensure that the quality of outcomes does not slip. In particular, younger clients are much more information-hungry than their predecessors and require both education and mentoring.”

Figure 1: Based on the last 12 months of interaction with your primary wealth management firm, do you agree with the following statements?

HNW research

Source: The Futurewealth Report 2015, Generation sceptic: Meeting the millennial standard

 

The research also highlighted that the engagement model for these clients is fundamentally different. Specifically, while 71% of over 60s attribute responsibility for delivering a positive experience on client outcomes to either their relationship manager or their wealth management firm, just 25% of millennials feel the same [Fig 2].

Instead, the under 40s are far more likely to view service responsibility as a collaboration between these two entities. Over 20% of the younger generation believe that the responsibility for outcomes is split equally between relationship manager and wealth management firm, compared to just 5% of the over 60s.

“The way that the next generation want to interact with their wealth management firms is fundamentally different from their predecessors. Successful next generation strategies will require institutions to develop deeper alignment with the RM to ensure that these clients receive outcomes that meet these standards” commented Sebastian Dovey, managing partner of Scorpio Partnership.

Brett Williams, Managing Director, SEI Wealth PlatformSM, U.K. Private Banking commented: “Our research demonstrates the importance of ensuring that wealth managers match engagement strategies to the needs of individual clients. Given that younger generations appear by and large less satisfied with the service they receive, many firms need to work harder to ensure they have a profitable client base to serve for many years to come.

“Effective engagement strategies are the ones that bring together a blend of human interaction and efficient technology. If wealth management firms get the basics right and remain close to their client they can build strong, sustainable businesses.”

Figure 2: Of these eight key client outcomes, how many does your relationship manager take responsibility for, versus your wealth management firm?

HNW research

Source: The Futurewealth Report 2015, Generation sceptic: Meeting the millennial standard

 

The respondents cited the main reason for generating trust in their wealth management firm as the quality of products and services that they receive. Younger clients are also significantly more focussed on the robustness of security processes, with 30% of European under 40s stating this is an important influencer over their trust in the firm, compared to 20% of all respondents.

Wealth management firms also have a vital role to play in generating client confidence in their relationship manager. For 63% of the UK’s wealthy, trust in a relationship manager is fostered by the quality of advice they receive and a further 52% are given confidence by their expertise level, putting an onus on firms to recruit the right calibre of personnel.

While these elements are still significant for the younger generation, the under 40s also place more emphasis on their relationship managers profile on a professional networking site, as well as the credentials supplied by the business. A quarter of those from the UK under the age of 40 say that they generate trust in their relationship manager based on the information provided to them by their wealth management firm.

To read the full report please visit: www.scorpiopartnership.com

For more information please contact:

Sebastian Dovey

Managing Partner

Scorpio Partnership

T: +44 20 7086 5223

E: seb@scorpiopartnership.com

 

Catherine Tillotson

Managing Partner

Scorpio Partnership

T: +44 20 7086 5224

E: cath@scorpiopartnership.com

 

Dana Grosser
SEI

T: +1 610 676 2459

E: dgrosser@seic.com

 

Monique Vaclavek

Head of Marketing & Business Development
NPG Wealth Management
T: +352 45 67 30 4345
E: Monique.vaclavek@npgwm.com

 

Muriel Hoffmann

Marketing Communication Manager
NPG Wealth Management

T: +352 45 67 30 4608

E: Muriel.hoffmann@npgwm.com

 

Notes

  1. In total, 3,113 individuals took part in this fifth global poll of the Futurewealthy. The average level of wealth among these individuals was USD2.7 million.
  2. Geographically, 36% of the sample group live in Asia Pacific, 46% live in the Americas and 17% live in Europe.
  3. The research covered four different aspects of relationship management, the third of which has been included in this paper:
    • The role and responsibilities of the relationship manager
    • The desired contact strategy of clients with their relationship manager
    • The responsibility of the relationship manager for delivering client outcomes
    • The fiscal and non-fiscal value of the relationship manager
  4. The research was conducted using an online survey. Participants were identified using profiling techniques to determine their likelihood of qualifying as Futurewealthy candidates. They were contacted directly by email.
  5. The research was conducted by Scorpio Partnership in collaboration with NPG Wealth Management, and SEI.
  6. Scorpio Partnership is a pioneer in the art of translating the complex needs of wealthy clients into practical, innovative and profitable solutions to target these customers. This award-winning firm has developed client insight from thousands of millionaires and billionaires around the world. With this knowledge, the firm has implemented strategic research, practical consulting and business innovation projects in over 35 countries.
  7. As a well-established life assurance specialist, NPG Wealth Management (NPG) develops holistic, cross-border financial planning solutions for (Ultra) High Net Worth and High Affluent clients across Europe. Together with a solid network of select partners – private banks, family offices and independent financial advisers – our fresh approach helps anticipate and understand the needs of wealthy clients in a world of change. With EUR6bn Assets under Management, NPG is owned by J.C. Flowers & Co, one of the leading investment firms in the international finance industry. Behind NPG is a dynamic team of experts united by a common mission: offering compliant and sophisticated solutions that exceed clients’ needs and expectations. Trust, dynamism and proximity are at the heart of our philosophy: npgwm.com
  8. SEI (NASDAQ:SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of June 30, 2015, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $661 billion in mutual fund and pooled or separately managed assets, including $262 billion in assets under management and $399 billion in client assets under administration. For more information, visit seic.com.

 

 

 

Who is the largest private bank in the world by assets under management?