Price conscious, sceptical and socially responsible: Wealth managers face millennial challenge

William Turvill
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Investors born between 1980 and 2000 present a new challenge for wealth managers (Source: Getty)

Wealth managers should target the growing number of millennial investors, a new report has advised.

Millennials, defined as those born between 1980 and 2000, currently account for 10 per cent of global private wealth, according to the Boston Consulting Group. This proportion is forecast to increase to 16 per cent by 2020.

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The BCG report, aimed at wealth managers, looks at private financial wealth, which is in cash and deposits, mutual funds, listed and unlisted equities, debt securities, life insurance payments and pension entitlements. It does not include investors’ residence and luxury goods.

As well as presenting an opportunity for wealth managers, millennials also present a new challenge, the report suggests.

BCG noted they are “highly sensitive to competitive and transparent pricing”, sceptical, carrying out their own proactive research, and require transparency and digital capability in their wealth managers.

The report said: “Having lived through the 2007-2008 financial crisis as young people, they are perhaps more sceptical about the financial industry than previous generations, prompting them to seek full transparency on both management fees and investment performance, especially in the current low-return environment.”

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It added: “Overall, millennials represent a growing pool of prospective clients who are highly discriminating, sceptical, and inclined to carry out their own proactive research. Their needs in the areas of digital capabilities, transparency, and socially responsible products demonstrate their self-directed drive.

“In order to measure up to the demanding attitudes of this younger generation, wealth managers must ensure that their value propositions are ‘battle tested’.”

The report also recommended wealth managers should target women investors.

“Efforts to target women in a concentrated and engaging way continue to lag among wealth managers,” said the report, noting that women currently hold 30 per cent of global private wealth and that their wealth is expected to grow at an annual rate of seven per cent, slightly above average.

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