Around one-third either exclusively or frequently put their money into environmental, social and governance products.
Greying managers
Besides wealth management clients getting younger, we’re also witnessing that managers are getting older.
In fact, the average adviser is 51, with just 10 per cent younger than 35. More than 20 per cent plan on retiring in the next 10 years and they don’t have a plan for who will replace them.
This puts significant pressure on managers, especially considering 80 per cent of those set to inherit their parent’s wealth plan on changing advisers.
Thus, what can managers do to meet millennials’ expectations and ensure their businesses not only survive, but do well?
There’s no quick fix to the changing demographic in wealth management. There are, however, steps firms can take to ensure longevity.
To increase headcount, managers need to get creative in recruiting. As the wealthy themselves are diversifying, advisers should focus on recruiting from those who are under-represented in the field, like people from minority backgrounds.
To attract and keep young advisers, firms should tie compensation to book-building and increasing knowledge, instead of growing assets.
This further incentivises people from minority backgrounds and those with lower incomes. All in all, managers should look beyond the usual recruitment grounds, like wirehouses, for new recruits.
A big issue is the generational disconnect between ageing investors and younger clients. Bridging this gap means improving training to include new methodologies and technology.
Technology can also greatly improve firms’ regulatory and compliance abilities, giving them more time to spend getting to know clients. What also helps is arranging a succession path well before retirement.
Regarding clients, keeping them involves a team approach to management.
Teams need to be multigenerational, to ensure knowledge and skills are transferred from retiring advisers to their younger colleagues and vice versa.
Additionally, teams should focus on building relationships across multiple generations of their clients.
All this ensures continuity between retiring managers and those who will take over, making it easier for a new generation of managers to confidently advise clients who look, talk, and think like them.
Zlatko Vucetic is chief executive of trading platform Infront Finance
