Wealth firms need to have the right investment mix and digital strategy to attract modern investors, according to our latest report.
- While it’s a credit to wealth firms that retail investors are happy with their service through recent market volatility, there is scope for them to better adapt to the needs of younger generations.
- To engage successfully with Gen X and Millennial investors, wealth firms must offer information about alternative assets and play to their use of digital and social channels as sources of investment ideas.
- Our report finds that wealth firms have an opening to differentiate themselves and recommends five ways to attract and engage investors.
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Through turbulent markets, advances in technology and new alternative assets shaking up the industry, one constant for wealth firms who want to create and maintain a competitive advantage is to make things personal.
Our latest report, Bridging the generation gap: Five ways to attract investors and create competitive advantage is based on a survey of more than 1,000 retail investors. We uncover investors’ views on a wide range of topics from digital experiences, advisor relationships and their appetite for alternative investments.
Nine out of ten (92%) investors say they are satisfied with their advisors. Investors across generations are happy with the service they’ve received over the past few years of volatile financial markets, but drilling down into the data reveals that wealth firms are more in tune with Baby Boomers than Gen X and Millennials.
Baby Boomers are more satisfied than Gen X and Millennials with their investing experience
There is scope for wealth firms to better adapt to the needs of the modern investor and younger generations looking for differentiated digital experiences and investment opportunities.
The desire for differentiated alternative investments
To attract and engage successfully with modern investors – specifically Gen X and Millennial investors – wealth firms must provide information and education about cryptocurrencies, ESG investments and other alternative investments. These asset classes do not hold the same appeal for Baby Boomers, according to our research.
Take ESG investments – 23% of Millennials and 22% of Gen X say they would like to discuss these investments with their financial advisors. By contrast, Baby Boomers are less interested, with only 9% wanting a discussion.
We see similar themes across other alternatives – from hedge funds to private investments and real estate. Notably, all generations of investors would like more information about index strategies, presenting an untapped opportunity for wealth firms.
Social media to generate investment ideas
In today’s digital age, it is clear just how important digital and social channels are as a source of information for all investors, but especially younger generations. Our report shows that 33% of Millennials and 21% of Gen X use social media to gather investment insights and ideas, compared with only 3% of Boomers. This highlights an opportunity and area for growth for advisors and firms.
Younger generations use a variety of social media channels such as Reddit, TikTok or Twitter. They also have specific preferences when it comes to communication channels. For instance, Gen X would just as soon receive an email as a phone call, with 55% of them saying they prefer phone calls versus 56% for email. Again, this shows the growth in digital communication channels.
Attracting the modern investor
At a time when modern investors are embracing new investment products and digital content, wealth firms have an opportunity to present the value of their offerings by personalising advice and strategies to meet unique investor needs and goals.
Our report concludes by highlighting five ways – ranging from service personalisation to identifying 2023’s long-term investment opportunities – for firms to differentiate themselves and help to bridge the generation gap.