Specialists in asset management, especially financial advisors and managers, are pondering how to preserve the assets under their management after they are passed down to the next generation. Part of these assets will go to a pension or cover the expenses of the previous owner, but most of the assets will go into the hands of inheritors. And one should bear in mind that representatives of the new generation approach the capital in a totally different way.
The difference in attitudes towards capital between millennials and previous generations
Millennials not only have a different attitude towards money but also expect a different approach from financial advisors and managers. Financial managers used to build more personal relationships with clients and organized regular meetings. Investors of the new generation don’t care much about large offices and business lunches in a fancy restaurant; they stick to a more practical approach. While the personal relationship between the client and the manager is still important, most of the transactions take place online. Companies need to find new solutions for communicating with their customers, thus increasing the level of service.
Some conservative managers doubt that digital solutions for interacting with clients will actually be in demand. In practice, it turns out that not only millennials but also representatives of the older generations willingly use various applications to control their finances.
Millennials’ abandonment of financial advisors and managers
What are the expectations of today’s generation of clients, and how can asset managers respond to these demands? One of the most important innovations is that asset managers now put emphasis on self-servicing. Clients have begun to conduct their own market analysis and choose which company, fund, or stock exchange they should invest in.
There is a huge amount of information in the public domain for study, and this allows private investors to independently analyze assets and make decisions. Now clients better understand the changes in quotes and commissions, as well as see the emergence of new tools for interaction with companies. Online trading is available round the clock – investment information is updated 24/7.
Progress changes regulatory requirements
Along with technology development, not only customer behavior but also the requirements of regulatory authorities are changing. Regulators demand maximum transparency from companies, and inspections are becoming more complex. Compliance without the use of modern tools is becoming increasingly difficult. The latest technologies are now an integral part of the successful work of companies, and those companies that don’t have a high-quality IT infrastructure will find themselves in a difficult situation.
The corresponding software can either be developed or purchased as a ready-made solution. As a rule, the larger the investment company is, the more it needs an original application developed for its processes. This is proven by Andersen’s experience: the majority of our company’s clients operating in the financial sector are large banks and corporations. However, we have also provided specialists to help small FinTech startups – they have noticed the benefits of outsourcing as well.
It was only yesterday that communication with clients was kept solely by phone calls; today they have been replaced by text messages via messenger apps and social networks. When it comes to sensitive data, investment companies use more reliable platforms designed specifically for this purpose. It is possible that, in the future, there will be new ways to communicate and support the work of managers with clients. Technology should provide clients with the ability to independently control the situation, but at the same time, the investor shouldn’t completely lose touch with the asset manager.
There is no truth in thinking that now the client is faced with a choice between the “old school” and the self-service mode. These approaches can be successfully combined. The client is often able to make a decision on the deposits on their own, but sometimes they still need the help of a professional consultant. For instance, if a travel agent can provide a client with a favorable discount and offer travel on the most favorable terms, why would a tourist search for and book a hotel independently? If an investment manager rightfully argues that they are able to provide a subsequent high return, why not pay them 1% with the guarantee of a return of 3% of the investment amount?