Expert: Robert Crossley, Franklin Templeton Investments Facilitator: Martyn Laverick, Catalyst Partners
Headlines:
- 75% of millennials and 91% of Gen Z rely on social media as their primary source of investment information and advice
- 75% of private bank clients under 42 do not believe in the ability to outperform public markets, and a third of those above 42 share the same view
Discussion points:
Generational differences in wealth attitudes
The significant differences in attitudes towards wealth, spending, and investing across generations. Younger generations, such as millennials and Gen Z, have different formative influences and experiences compared to baby boomers.
They are more inclined towards income generation, distrust active management, and rely heavily on social media for investment information and advice. This generational shift in attitudes and trust dynamics poses challenges for traditional wealth management firms.
Rise of neo-brokers and engagement strategies
The emergence of neo-brokers like Robinhood, Trade Republic, and eToro is discussed. These platforms are attracting new investors, particularly younger generations, through gamification, contextualization, and influencer marketing.
They are increasing the total addressable market and building trust with younger generations.
The discussion highlighted the need for traditional wealth managers to adapt and leverage similar engagement strategies to remain relevant.
Expanding notion of assets
The expanding notion of assets beyond traditional financial instruments. Non-fungible tokens (NFTs), digital assets, and intangible assets like song royalties and limited-edition products are discussed. Examples include Nike's sale of NFTs for limited-edition sneakers, Rihanna's NFT sale for song royalties, and the ability to own and trade virtual items and experiences.
This expansion challenges traditional portfolio construction and asset ownership models.
Potential of blockchain technology
The potential of blockchain technology to reduce settlement costs, tokenize assets, and enable programmable assets with customizable utilities. Examples include the ability to airdrop money with specific spending restrictions, create time-limited assets, and enable automatic royalty payments through smart contracts.
The transparency and programmability of blockchain-based assets are highlighted as game-changers for the industry.
Increasing role of AI in wealth management
The meeting extensively discusses the increasing role of AI in investment processes, client interactions, and portfolio construction.
AI's ability to provide personalized advice, contextualization, and scalability is highlighted. Examples include using AI for portfolio construction, client engagement, reporting, and creating personalized content like podcasts.
The discussion emphasized the need for wealth managers to embrace AI to enhance efficiency, differentiate services, and meet evolving client needs.
Adapting to changing client needs and expectations
The importance of wealth managers adapting and expanding their roles beyond traditional investment management.
Embracing technology, enhancing client engagement, building trust, and maintaining relevance across generations was highlighted as well as the need to segment clients based on interaction preferences, rather than just wealth and age.
Successful wealth managers will be expected to become trusted advisers and life coaches, by leveraging technology to provide personalised and scalable services.
Key takeaways:
- Educate advisers and clients on the value proposition of wealth management services in the context of emerging technologies and changing client needs.
- Explore and implement AI-powered tools and processes to enhance efficiency, personalization, and scalability in client interactions and portfolio construction.
- Develop strategies to engage and build trust with younger generations through social media, influencer marketing, and gamification.
- Expand the notion of investable assets to include digital assets, NFTs, and intangible assets like song royalties and limited-edition products.
- Leverage blockchain technology to tokenize assets, enable programmable assets, and reduce settlement costs.
- Segment clients based on interaction preferences and needs, rather than solely on wealth and age.
- Adapt business models and pricing strategies to cater to the evolving needs and expectations of different client segments.
- Continuously explore and adopt emerging technologies to differentiate services, enhance client experiences, and maintain relevance in a rapidly changing industry landscape.
