Are you ready for Millennial money?
The $30 trillion dollar question.

Are you ready for Millennial money?
The $30 trillion dollar question. by Michael Rennie

Hi, I’m a millennial and when I grow up, I want to RETIRE.

Now the reality is that for most of us to make this a possibility we either needed to be saving 40% of salary since we were 21 or there is going to need to be some outside intervention (not to get too deep but inheritance), morbid I know but according to Gallup we’re estimated to inherit $30 trillion over the next 30 years.

With that in mind Wealth Managers need to be ready and not just for us but Generation Xers as well. Although unlike millennials it’s not a case of being ready in a few years when we start to hit peak earning potential and realize that working until your 85 isn’t feasible so we take drastic action.

Generation X is between 40 and 55 which according to the UK Office for National Statistics puts them in their peak earnings window and therefore will be the core of the mass-affluent (more than $100K but less than $1M to invest) market that wealth managers need to capture urgently. Not only to maintain their business but to grow it as well.

Are you (wealth managers) ready for these customers? Unlike Boomers (where the wealth currently sits) Generation X and more so millennials have grown up with technology, from game consoles to smartphones, these generations manage their lives digitally. It’s also no doubt a contributing factor as to why they are 2.5 times more likely to change their bank than previous generations.

However, it’s not as simple as creating a shiny mobile app that allows your customers to check on their portfolio to check potential traction since the day before. It requires a complete reinvention of the customer experience: how do you onboard customers; how do you request documents; how do your financial advisors interact; do you have a conversational UI and on and on…

In tandem with this, I believe that wealth managers will have to change their operating models to be much more flexible. Particularly for the mass affluent market – 1.5% for a fully managed portfolio is tough to swallow on 100K. Although for many that is too much money to leave it solely to the robo-advisors with their 0.5%. The future for me is a blended and flexible fee model which allows me to have my money automatically managed when I want and the ability to have human intervention seamlessly when I need more detailed insight.

Is your current tech-stack ready for this or are you still working out how to create a robo-advisor?

So, are you ready for millennial money? If not, your competitors might be and the spoils that go to the victor of this particular battle are the cumulative and increasing wealth of three generations.

You do the math.