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Wealth management goes digital

  • Wealth managers are facing the biggest inter-generational wealth transfer in history as Generations X & Y inherit the estates of baby boomers.
  • Wealth managers need to maintain baby boomer loyalty and help Generations X & Y manage their finances.
  • Approximately 6 million people are not getting advice from a financial planner creating a major opportunity for the wealth management sector.
  • Technology solutions include unified communications, IP multi-channel contact management, content management and distribution systems, integrated messaging services, and virtual personal agents

Wealth management professionals are pursuing a digital transformation agenda as Australia’s financial services sector faces the greatest inter-generational transfer of wealth in history.

The technology generation

As pre boomers and baby boomers pass on their wealth to Generations X and Y, Telstra research has found two out of three Gen X and Y found a suite of digital services and technologies appealing.

Among the technologies needed are smartphones and tablets, which are preferred by digital investors as the devices best able to help manage finances, The Digital Investor report states.

Wealth management goes digital

At the same time, four in five digital investors view online as the most efficient and productive channel for accessing the wealth management services needed to facilitate this inter-generational wealth transfer.

Creating wealth opportunities

The results highlight a period of innovation and transformation within the wealth management sector that Rocky Scopelliti, Group General Manager – Industry Executive at Telstra, says wealth managers will need to help look after all generational groups.

On one hand, they must seek to maintain the loyalty and assets of baby boomers. On the other, Generations X & Y represent an opportunity to expand the overall addressable market in financial services.

To get your brand into those conversations you are going to have to think about social media

Mr Scopelliti says it was surprising to discover a lack of confidence in financial management among the digitally savvy Gen X & Y’s. For example, the research shows only one in three use a financial planner or adviser. This leaves approximately 6 million people with whom the industry could target advice services to.

“They were the pioneers of the modern digital era as we’ve known it,” he says. “So why hasn’t their digital mastery translated into confidence when it comes to mastering their finances?”

As these generations inherit the wealth of their baby boomer families and create their own, Mr Scopelliti says the challenge for wealth managers and advisers will be to educate the 6 million potential customers already in the market today.

Digital solutions

That process begins by understanding the nature of digitally-savvy investors. One in three of these younger digital investors want to engage their financial adviser in conversations via social media.

“To get your brand into those conversations you are going to have to think about social media,” Mr Scopelliti says, noting Generation X already account for 25 percent of total assets and the largest share of debt at 47 percent.

Meanwhile, Generation Y – the “digital heirs” – also require social media and digitally savvy wealth managers as they become a larger, more influential part of the workforce. Generation Y’s represent 18 per cent of workers today, with that climbing to 35 per cent by 2020.

As a result, education and digital collaboration solutions have essential tools for wealth managers.

Mr Scopelliti says they must consider how to use technologies such as video, online collaboration services, education videos, alert services and intelligent assistants to create efficient digital ecosystems.

As more and more information finds its way online in video format, wealth managers need to focus on making the customer experience a great experience

This interaction can be facilitated through modern cloud technologies ICT such as unified communications, IP multi-channel contact management, content management and distribution systems, and integrated messaging services. In the future, virtual personal agents are also expected to augment today’s offerings, Mr Scopelliti says.

Given the demands now being placed on wealth managers by the complexity of issues related to this intergenerational wealth transfer, he adds complacency should be avoided.

“This is not tomorrow’s problem, this is today’s opportunity.”

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