Wealthy Millennials turning to FinTech money managers
Written by Peter Walker
New research has revealed that 56 per cent of UK Millennials are unhappy with their current wealth management services and are not loyal to any one manager – with an average of three private banking relationships.
This is according to a study by pricing strategy specialists Simon-Kucher & Partners, which found that three in five Millennials were not satisfied with traditional wealth managers and 80 per cent were using, or considering, using FinTech alternatives to manage their money.
These Millennials are planning to allocate 56 per cent of their investable assets into FinTechs.
Silvio Struebi, Max Biesenbach, Desi Soetanto, Ryan Lim and De Liu from Simon-Kucher & Partners conducted the research in February 2019, with 645 individuals born between 1981 and 1996 from six countries - Australia, China, Hong Kong, Singapore, the UK and the US - asked to complete an online questionnaire.
Participants had either at least one private banking relationship in the family or at least $500,000 in investable assets in their personal accounts. The sample was comprised of approximately 100 participants from the UK.
“Especially in today’s turbulent market environment, banks need to rethink their offerings to satisfy their future customers,” said Silvio Struebi, partner and head of banking operations for the APAC region at Simon-Kucher.
“The future survival of private banks will depend on whether they’re able to master the art of winning Millennials and keep them as customers,” noted Soetanto, consultant at Simon-Kucher, adding: “Private banks need to get ahold of this next generation before it’s too late.”
Biesenbach suggested that private banks have to significantly upgrade their customer experience, as the next generation value quality and brand. “Banks need to learn from brands that Millennials love, such as Apple or Netflix, by adopting certain practices that these innovative companies are providing.”
Soetanto argued that wealth managers must look at giving 24/7 access, the option to select their preferred relationship manager, customised recommendations, fee transparency, and exclusive offerings. Perhaps surprisingly, price was consistently ranked as the least important factor by Millennials when selecting private banking services.
An FStech investigation earlier this year found that 28 per cent of high net worth (HNW) clients’ children discontinue the relationship with their parents’ wealth manager, with many moving the money to digital challengers.
Much like the moves being made by UK High Street banks to hold onto younger customers tempted away by mobile-only players in the new Open Banking environment, asset managers may have to update their propositions to survive the Baby Boomer intergenerational wealth transfer.
GlobalData showed that 38 per cent of the global HNW population is above the age of 60, which equates to 4.3 million individuals.