Four Ways to Transform Wealth Management for a New Generation

As a new generation approaches wealth management, many avenues exist for modernizing the experience.
Andrea Renna and Vincenzo Elifani

It has never been easier to start investing by downloading an app or turning to Google for insights. As this trend continues to get traction among first-time investors, wealth management (WM) firms face the challenge of keeping up to speed and adapting their offering to their customers’ evolving needs.

At frog, we help financial services companies shape their future. To support WM teams in navigating the shifting industry landscape, we’ve identified four opportunity areas that we believe will drive the evolution of future experiences in wealth management. 

1Embrace entertaining experiences while reducing app fatigue.

As digital propensity continues to rise, with a growth in the number of assets and complexity, the issue of app fatigue has grown too. A result is that clients are increasingly viewing experiences—rather than product offerings—as differentiating factors in wealth management firms.  

Younger generations are more likely to test new digital financial products, especially those of innovative fintech firms, which are trying to disrupt a single vertical rather than a broad set of services. New players are setting the bar in terms of customer experience and expectations across all industries. In order to onboard and retain new generations, WM firms need to provide an experience as entertaining and immersive as watching Netflix or playing with the Oculus. On top of this, they will also need to leverage the social dynamics that clients have become acquainted with on online platforms to allow them to connect with others and share ideas.  

However, while the proliferation of fintech firms represent a threat in terms of new competitors, they also represent an opportunity. The dispersion of asset classes, wallets, apps, products and platforms can be overwhelming and require cognitive load to keep track of everything. WM firms can tap into this opportunity of unlocking experiences that provide clients a one-stop investment environment, aggregating their assets under one unified, holistic or even gamified view. Also key is explaining the data behind those assets through exclusive experiences and new formats that speak the language of younger generations.  

2Include educational tools that go beyond financial returns.

A report by the Kings Court Trust suggests that we are on the cusp of an unprecedented cross-generational wealth transfer. By 2027, in the UK alone, it is expected that wealth transfers will nearly double from the current level of £69 billion to £115 billion every year. 

However, despite the significant wealth transfer set to take place in the coming decades, recent trends show how younger generations are either more optimistic they can manage their wealth by themselves or simply don’t trust financial advisors as much as their parents do.  

Instead of trying to get younger investors to follow in their parents’ footsteps, WM firms need to acknowledge new generations’ diversities, anticipate their appetite for different asset classes and provide the relevant educational tools beyond what they can find on Google or other apps. 

Learning about wealth and investments doesn’t have to be synonymous with reading dense, technical PDF reports from Chief Investment Officers. Younger customers are looking for learning opportunities that go beyond financial returns and that can address financial wellbeing on a more personal level. Innovative educational tools can help start the conversation on wealth with the broader family, and family-focused features can create a stronger bond with their younger clientele that can make it easier to include their needs in the overall family wealth plan.

3Validate your clients’ independent research with your expert context.

We live in a world where financial advisors are no longer the sole source of investment knowledge. This knowledge is now more accessible to clients through social platforms and websites. Consequently, clients are more prone to independently forming their opinions about potential investments before seeking the advice of a wealth manager.  

Today’s established clients spend time on many different financial blogs and platforms, such as Twitter and Seeking Alpha, and are more likely to come to the advisor already with an opinion in mind about specific investments.  

At the same time, younger generations are becoming more comfortable with sharing the story of how they’re building their wealth. Rather than spend time with their WM advisor, they’re more likely to be active on social media. In fact, while friends and family have the most influence on young people’s financial decisions, according to a report by Morning Consult, roughly one-third of responders cite Instagram, Reddit and Twitter as primary sources of information.

As clients access news online and collect more data points, it has become increasingly challenging for them to check the veracity of their sources. This challenge is also found on parts of social media, where the depth of information is usually limited to a few characters.  

Wealth managers need to find a middle ground where the essential guidance they bring to the table meets the research that clients have done on their own time, enabling a richer and more personalized conversation. Seeing where the client is coming from is a necessary requirement for WM firms. It is no longer sufficient to rely on the view of what the client has done in the WM firm’s own ecosystem, but instead needs to extend to what happens outside of it.

4Incorporate new technology into your process with younger clients.

A younger cohort of high-net-worth individuals (HNWIs) is emerging, whether through their enterprise, a wealth transfer or a combination therein. Meanwhile, according to a 2022 report by Capgemini, 62% of wealth managers say they cannot confidently understand and cater to millennials.  

As millennials grow in economic power, wealth management firms will be courting a tech-immersed generation that has grown up in a world that is digitally native, fast and reactive. This generation thrives on technology and can quickly master any new tools that come their way. Therefore, it’s only fitting that wealth managers actively keep up with recent tech innovations in their sector, particularly in the growing fintech space. 

The line between the real and virtual worlds will get blurrier across all sectors, but are having a real impact on the notion of wealth. The rise of NFTs (non-fungible tokens) demonstrates the interest younger generations have in redefining what it means to have, acquire and manage assets. In addition, metaverse experiences can immerse customers in new worlds that simulate scenarios that are not replicable in real life. Considering these new domains can show your younger clients that you’re willing to try new methods and engage them further.

Where does wealth management go from here? 

The next generation of wealth management isn’t just on the way—it’s here. Wealth managers need to work across these new opportunity areas to prepare themselves for the future. Understanding clients’ new investment behaviors can unlock immense potential to anticipate their financial needs and priorities. 

Big tech companies and fintech startups are shaking the wealth management landscape by setting the bar higher in terms expected customer experience. At the same time, new segments with drastically different needs are emerging and demanding an offering akin to many other platforms they have become acquainted with across other sectors.  

These factors, coupled with the massive generational wealth transfer that is due to happen in the next few decades, require wealth management firms to make bold decisions and focus not only on innovating their product offering but also, and most importantly, on moving towards an experience that goes beyond wealth to become more personal and entertaining. 

To learn about frog’s financial services expertise, read more about our work in this rapidly evolving sector. Get in touch with frog today to find out how to deliver the next gen of wealth management. 

Authors
Andrea Renna
Associate Design Director, frog Milan
Andrea Renna
Andrea Renna
Associate Design Director, frog Milan

Andrea is a design lead specializing in product and service innovation and user experience. He focuses on transformation and vision programs; blending system, service and digital product design expertise at the edge of innovation. 

In his 15-year career, Andrea has led portfolio-defining projects from the frog Center of Excellence for global clients and sectors, including financial services, insur-tech, telco, media and life sciences. He thrives on helping clients navigate innovation challenges and expanding the frog innovation toolkit.

Vincenzo Elifani
Senior Strategist, frog Milan
Vincenzo Elifani
Vincenzo Elifani
Senior Strategist, frog Milan

Vincenzo is a Senior Strategist in frog’s Milan studio. Vincenzo is passionate about designing products and experiences from the ground up. He draws inspiration from disparate disciplines and industries, using both creative and analytical thinking to connect the dots and go beyond the obvious. 

Prior to frog, Vincenzo worked at Lego Ventures in San Francisco, where he backed early-stage founders in education technology and gaming. He holds an MBA from Cal Berkeley, as well as a BA in Philosophy from La Sapienza.

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