Key Findings from the World Wealth Report 2015: Millennial HNWI

In Part 1, courtesy of Capgemini and RBC Wealth Management, we explored the changing role of wealth managers within the evolving financial landscape and rise of new technologies. In part 2, we will look at some of the key findings from this year’s report, and comment specifically on the unmet needs of Millennials. According to Capgemini, there were 5 key findings from the 2015 World Wealth Report.

1. North America and Asia-Pacific drove HNWI market growth in 2014, with Asia-Pacific regaining the top spot in HNWI population and poised to take the lead in HNWI wealth this coming year.
2. Strong gains in these regions were not enough to push growth beyond the moderate level of 7% globally, which is the second slowest rate in the last five years
3. HNWIs have increased their equity holdings over cash as the largest share of their portfolio holdings, and they have a strong demand for credit
4. There is significant opportunity for wealth management firms to develop a robust social impact offering to address HNWI needs and capitalize on their demand for increased wealth manager involvement
5. The wealth manager role and value proposition is undergoing a major evolution, requiring firms to re-think service models and capabilities. Unmet needs from younger HNWIs and industry challenges such as new entrants, regulation, and rising costs are impacting the wealth manager’s role, requiring that firms take targeted action

The key findings highlight how firms need to re-think the unmet needs from younger HNWIs. Millennials represent a large group of HNWIs under the age of 40 who are poised to inherit approximately $41 trillion from their baby boomer parents over the next 40 years. Wealth transfer creates the opportunity for Advisors to retain clients into the next generation. However, studies have shown that 95% of those next generation investors will leave the financial advisors upon the transfer of wealth. Herein lay the opportunity for Advisors to nurture and engage Millennials to avoid this leakage.

Millennials are a very unique generation that are poised to reshape the economy.  This means that financial and marketing strategies that work for their Boomer or Gen X parents, may not work for them.  Their unique experiences have already changed the ways in which we market, buy and sell.  This generation will likely conduct most or all of their wealth management functions through digital channels, which means a strong digital presence is important for Advisors looking to attract or retain the young HNWIs. As a Millennial myself, I know how we operate and with my peer network, I often confirm my own assumptions as well.  So, how can Advisors better market to the Millennial generation?