Mass Inheritance: Here’s What The Next Generation Of Wealth Wants From Their Bank
Financial gurus are calling it “the greatest transfer of wealth in U.S. history.”
“It” is the estimated $59 billion will be transferred from older generations to younger ones all the way out to 2061, according to recent data from Boston College’s Center of Wealth and Philanthropy1.
In the short-term, economists expect about $30 million of that generational largesse to go directly to today’s Millennial generation, which will make that demographic a big focus for financial institutions looking for future revenue opportunities.
So how do banks go about the task of attracting millennial money? Start by walking in their shoes and find out exactly what younger, affluent Americans want and expect from their financial institutions.
Here’s a snapshot – – see if your bank is on track to deliver these consumer experiences to Millennials:
Fickle, and itching for change – Banks should know that younger, more affluent financial consumers are more apt to change financial institutions than their parents and grandparents. According to a Scivantage® and Aite Group report, younger financial consumers are “far less loyal” than older consumers to banks and other financial services companies2. Consequently, you’ll have a shorter window of opportunity to make your pitch to millennials, who won’t hesitate to move on if they don’t like what they see.
Millennials “want” to do business with banks – According to Scivantage and the Aite Group, 40% of younger financial consumers consider their bank as a primary money management services provider, compared to 20% who say the same thing about brokerage, financial planning, and mutual fund firms3. That’s a big built-in advantage for banks, who need to market themselves as “one stop shopping” financial services providers to younger customers who want their money management services bundled under one roof.
In a recent report published by Equifax, The Pursuit of Profitability, Celent comments that the implications for traditional servicing models at financial institutions are changing quickly with the emergence of Millennial clients. Banks should invest in mobile platforms that offer “desktop-on-the-go” functionality in order to make the advisor more nimble and address the unique financial behaviors of Millennial clients4.
Focus on digital – Millennials, and most consumers under the age of 40, for that matter, are accustomed to mobile and online banking experiences. And if they don’t get those experiences, they’ll move on down the cyber-road to another financial institution. According to the Mercator Advisory Report, DDA Account Opening and Underwriting Process: Today and he use of self-service methods to obtain information about financial services has increased; 25-31% of consumers used websites or special mobile apps to access financial institutions for information about products and services5.
Furthermore, the Equifax report, Straight Talk from the Next Generation of Credit Card Customers, states that Millennials want “the path of least resistance” when it comes to banking services and fees. Offer online tools, mobile apps and automated account alerts that support their “always connected” lifestyles6. So, if your digital banking options aren’t attractive to younger, affluent customers, they will seek out other providers.
Don’t stuff their mailboxes – Another digital tip for the generation that views information as a commodity – don’t send that information in paper-based formats. It’s not that Millennials don’t want to see newsletters and service options – they do. Digital only-based communications will give you a leg up over competitors who opt for the mailbox-drop in their marketing efforts. Another tip – this generation is financially prudent, and marketing offers like cash-back, rewards points, and discounts on services are a huge attraction for Millennial financial consumers.
These aren’t the only bank service issues for the next generation of wealth, but they are at the top of the list. Focus on addressing them, and garner your share of that $59 billion pie in the coming years.
1 New Report Predicts U.S. Wealth Transfer of $59 Trillion, With $6.3 Trillion in Charitable Bequests, from 2007–‐2061, Boston College Center of Wealth and Philanthropy, (May 2014). https://www.bc.edu/content/dam/files/research_sites/cwp/pdf/Wealth%20Press%20Release%205.28-9.pdf
2 The Race for Next-Generation Assets: Can Banks Maintain Their Lead?, Scivantage® and Aite Group, (July 2012). http://www.businesswire.com/news/home/20120730005213/en/Wealth-Management-Industry-Sufficiently-Tune-Young-Investors#.Vfw0zChXRUQ.
3 Scivantage® and Aite Group, (July 2012).
4 William Trout, “Capturing the Mass Affluent Opportunity”, The Pursuit of Profitability eBook, Equifax, Inc. (September 2015).
5 Ron Mazursky, DDA Underwriting and Account Opening Process: Today and Tomorrow, Mercatur Advisory Group (July 2014).
6 Straight Talk from the Next Generation of Credit Card Customers, Equifax, Inc. (September 2014).
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