How The Financial Services Industry Can Cater To The Next Generation Of Wealth

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David Allison is a bestselling author, international speaker and the Founder of the Valuegraphics Database. getty Within the next 25 years, we will see the largest wealth transfer in history as baby boomers pass an estimated $68 trillion down to the next generation. Anyone interested in reaching these next-generation high-net-worth individuals […]

David Allison is a bestselling author, international speaker and the Founder of the Valuegraphics Database.

Within the next 25 years, we will see the largest wealth transfer in history as baby boomers pass an estimated $68 trillion down to the next generation. Anyone interested in reaching these next-generation high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UHNWI) must learn to deliver on their values, wants, needs and expectations, which could be different from their parents. But are they? 

The financial services industry looks at this group — which I’ve dubbed The Inheritors — and sees nothing but questions. Thankfully, we can reach them.

My company surveyed 1,850 HNWI and UHNWI who will inherit from $10 million to over $100 million. We wanted to learn what these individuals truly cared about, and as we dug into the results, four distinct groups emerged:

1. The Masters Of The Universe

2. The Loyal Seekers

3. The ESG Champions

4. The Embryonics

We know what values are most important to people in each of these groups, but the key with values thinking is to apply these findings to your context. 

My friend, a very senior wealth advisory executive, agreed to brainstorm with me about the HNWI and UHNWI he and his staff look after at the international bank headquarters where he works. We came up with values-driven ideas that combine data and real-world experience to engage and influence these four groups. Here’s what we came up with.

The Masters Of The Universe

This is the take-charge, do-it-all group, and as a result, they deal with a lot of stress and anxiety. A 2015 survey of investors from UBS (via CNBC) found that “half of millionaires with less than $5 million — and 63 percent of those working with children at home — believe that one wrong move, such as a job loss or market crash, would have a major impact on their lifestyle.” They may feel they know more than their wealth managers and not want to be bothered by them, so wealth managers should adopt a hands-off approach.

When they do initiate contact, they want to hear back faster than fast — but make sure you let them know when you’re going to contact them. Don’t bring up anyone else in your conversations, and give them everything on their terms.

Values Thinking For This Group

For this group, consider a beeper (like doctors used to wear) that allows a client to “buzz” their wealth manager for a quick call back. These days, it might be an app instead of a beeper, but the 24/7 access is the point.

The second idea is a robot safety net. This is a programmable feature that allows the client to set parameters for immediate action should something go wrong somewhere while they’re sleeping or otherwise engaged. If, for example, the Chinese economy plummeted overnight, the robot would sell all their Chinese interests once the decline reached a certain threshold.

The Loyal Seekers

As the value of loyalty implies, this group likes to keep things the same. They come to a wealth manager to ensure a stable tomorrow for themselves and future generations. They’ll pay off their gravesites in advance — that’s how concerned this group is about the future.

Unlike the Masters Of The Universe, this group is likely to say, “Just tell me what to do.” Keep things simple: charts, graphs and even the restaurant where you take them out for a simple lunch.

Values Thinking For This Group

This group would respond well to a weekly one-page overview of what’s happening in the world, along with recommendations that correspond to those happenings. That said, it should feel very much like a VIP privilege to receive this one-pager. In addition, they’ll appreciate it if you host a simple quarterly or annual meeting to explain the state-of-the-finances to the whole family.

The ESG Champions

This group, which is driven by ESG (environmental, social and governance) investing, is actually much smaller than most people expected, making up just 20% of The Inheritors in our survey.

This group has both “personal environmentalists” (“how does this affect me?”) and “collective environmentalists” (“I’m part of a team that’s making the world a better place”).

Values Thinking For This Group

Institutions should walk the walk along with these folks: 1% of profits could go to a fund that HNW and UHNW clients who fit this profile are invited to help administer. They could receive copies of various proposals for the funds to be donated to ESG causes and have a vote. Together with the institution’s C-suite, they could decide how the group’s philanthropic giving will occur. 

At an individual level, they likely want an adviser who relates to their concerns and participates in their world alongside them. Accenture research published in MarketingDive found that “63% of consumers prefer to purchase from purpose-driven brands.” “Relationship maintenance dollars” should be allocated for each adviser so they can donate to the causes their clients from this group are most passionate about. They should be at the same galas, sponsoring a table and participating in philanthropic giving.

The Embryonics

These are the new kids on the block when it comes to HNW and UHNW individuals. Their fear of messing up is very real. They don’t want to do anything that will make it look like they don’t know how to be part of the tribe. They’ll want to know what’s coming next with their investment activities and will ask questions like, “What part of town should I live in now that I am this kind of person?”

It’s all part of learning what to do and how to behave now that they have money.

Values Thinking For This Group

Set up programs that let them network with the other embryonics — the new kids can meet the other new kids. In addition to the advisers that help with money and finances, offer them the services of “lifestyle advisers” who can arrange an introduction to the headmaster at the right school for their children, help them choose art for the new townhome that signals the right things to the people who understand art, or can help find the right vacations, vehicles or caterers.

In other words, help them avoid any embarrassing “new money” behaviors. 


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