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Bain & Co. Identifies What Young, Affluent Clients Want From Advisors

Most wealth management companies aren’t currently meeting millennials’ demands.

As young investors grow their wealth, financial services firms gain a once-in-a-generation opportunity to score new business, according to a brief from management consulting firm Bain & Company. Wealth management is an important path through which to connect to this fresh generation of investors. But it’s important to understand that up-and-coming clients want their advisors to provide specific services and experiences. Here’s what advisors should know about young, wealthy clients – and how to tap this market.

What Young, Affluent Clients Want From Advisors

Based on interviews with next-generation clients, Bain has identified six priorities this emerging customer base has for its wealth management team:

  1. Networking. Young clients want to connect with their peers and wider social networks. Wealth management firms can meet this demand through the development of technologies that facilitate these connections.
  2. Exploring. New clients crave access to a range of asset classes, including cryptocurrency, art and private equity, Bain says.
  3. Self-deciding. This group of investors wants to stay informed and make its own investment decisions.
  4. Holistic planning. Young clients are hungry for comprehensive and personalized advice, not just products.
  5. Simplifying. Emerging clients want streamlined and easy-to-use digital features and education platforms that reduce paperwork.
  6. Influencing. Young, affluent clients have an eye toward environmental, social and governance (ESG) factors and initiatives.

Meeting these priorities will likely require partnerships with various wealthtech providers, Bain says.

Additionally, these clients resist being easily categorized into traditional segments used by wealth managers. “They want to select the appropriate channel, service level or investment to suit the particular situation,” Bain says. “Dynamic segmentation, informed by real-time behavioral data, will become an important capability for firms to develop.”

How Young Investors Are Gaining Wealth

Most wealth management companies aren’t currently meeting millennials’ demands.Emerging millionaires are a promising class, representing an underserved market and a chance to score new business that will last decades into the future. “Many of this burgeoning group (age 20 to 45) are underserved – including professionals (69% of the young cohort), entrepreneurs (22%) and the second or third generation of wealthy families (9%),” according to the Bain brief.

Even if they’re not serving millennial millionaires, advisors are wise to focus on this generation and its wants and needs. In fact, millennials had an average net worth of more than $278,000 in 2021, according to research and consulting group Cerulli Associates. That’s an average yearly increase of 23.1% since 2016 and the highest growth rate of any generation.

What Advisors Should Know

Most wealth management companies aren’t currently meeting millennials’ demands.

For financial advisors, understanding what young, affluent clients want is an investment in the future. But most wealth management companies aren’t currently meeting millennials’ demands. “No contender, whether bank, brokerage or wealthtech company, has delivered an ideal end-to-end experience for this emerging segment just yet,” according to the Bain & Company brief.

Young affluent customers also noted that many wealth manager websites were hard to navigate and lacked “digestible market updates tailored to their portfolios.” They sometimes had trouble reaching advisors and hankered for additional services such as tax optimization, insurance coverage or estate planning.

The Bain brief explores a few strategies large organizations may take to address this emerging client demand. Those techniques include large-scale moves such as acquiring wealthtech firms.

But even smaller players should be aware of the shifting landscape in wealth management.

“While the market for wealth management is flourishing, the next few years won’t offer easy, straight-line growth,” the Bain brief says. “The mix of affluent clients is changing rapidly, and they have needs and priorities that many wealth management firms have just begun to sort out. Gaining a deep understanding of those priorities, and developing a business that addresses them effectively, will be essential to creating value from the new surge in demand.”

Bottom Line

As young investors gain wealth, savvy advisors will note what they require from their wealth management teams and meet those priorities head-on.

Tips for Growing Your Financial Advisory Business

  • Let us be your organic growth partner. If you are looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform. We match certified financial advisors with right-fit clients across the U.S.
  • Expand your radius. SmartAsset’s recent survey shows that many advisors expect to continue meeting with clients remotely following COVID-19. Consider broadening your search and working with investors who are more comfortable with holding virtual meetings or spacing out in-person meetings.

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