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Millennials are entering a transitional – some might say “maturing” – phase, especially insofar as their wealth management and banking relationships are concerned. Born between the early 1980s and the mid-1990s, some millennials are now approaching their forties – an age when their investment and wealth management preferences are becoming firmer.
This is especially true for HNWI millennials – likely current and future private banking clients – who comprise a rapidly growing cohort. As highlighted in a survey1 by Banque Neuflize OBC and the consulting firm Asterès, almost every person who becomes a millionaire between 2026 and 2036 will have been born after 1980, and more than 90% of new wealth generated during that decade will have been created by younger generations.
How do these groups see their financial future? Discover five strong trends:
Sustainability is a key issue for millennials. They want specific, innovative investment solutions, designed thematically, that align with their values and work to tackle the issues that concern them the most. Merely adopting a reliable investment strategy is not enough: millennials want to be able to gauge the real-world impact of their investments and to understand the mechanics that underly them. They also want to minimise the environmental footprint of their portfolios and avoid greenwashing. For them, sustainable investment does not mean going without, however: millennials want robust financial performance for the long-term, as well as clear, expert reporting, through digital and interactive tools.
According to a recently published survey by RBC Wealth Management2, 83% of wealthy millennial investors would be prepared to change their financial advisor if he or she lacked ESG financial expertise. This is backed by the World Wealth Report, published by Capgemini in June of this year, which found that 55% of HNWI worldwide believe that investing in causes with a positive ESG impact is an “essential objective” of wealth management, one which private banks should take into account.
Millennials are generation start-up – they are also the generation of the 2008 financial crisis. Millennials tend to avoid overly complex or abstract financial products, preferring more concrete investments whose mechanics and impact they can grasp. Hence they are especially drawn to private assets – like private equity or capital investments – as reflected by the “Capstone Millennials” project launched by Lombard Odier, highlights from which we presented at the beginning of the year.
See also: Private equity, investing in times of uncertainty
This is in line with industry global trends: 67% of investors are actively trying to allocate a larger proportion of their assets to alternative investments, such as capital investment funds, according to the Deloitte report Wealth and Asset Management 4.0.
Perhaps paradoxically, millennials are also strongly attracted to novel and innovative investment opportunities. So, for instance, according to the Capgemini report, 91% of HNWIs under 40 years of age have invested in digital assets.
How millennials interact with their bank, and the communication methods available to them, are crucial factors – they expect information to be transparent and always accessible. Almost 80% of millennials want more digital tools for interacting with their wealth manager, versus around 30% for the baby-boomer generation, according to the EY Global Wealth Research Report 2022.
Investors are showing an increasing preference for virtual conferencing over face-to-face meetings. More than half of those surveyed by ThoughtLab said that they would prefer to keep in touch with their wealth management advisor through digital channels – the authors of the study believe this likely reflects a lack of time.
Millennials are not looking for a 100% digital relationship, however. They appreciate human contact for matters that require careful thought and discussion, but for everyday and administrative matters they prefer email contact or instant messaging. In their eyes, it is the institution that must adapt to their preferred channels and habits, not the other way round. They expect a high degree of responsiveness, and want to make contact through less formal channels.
See also: How are the new generations redesigning private banking?
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Research conducted by Lombard Odier for Capstone Millennials has shown that this generation do not want to merely allocate capital, they want to understand their investments and the factors that differentiate opportunities.
Millennials have a strong desire to learn, and take nothing as a given. Their age, lack of financial awareness (which they freely acknowledge), and habits as media consumers mean they expect clear, deeply-researched explanations, preferring bite-sized, digital formats.
Though they expect a high level of experience and professionalism, millennials have little interest in traditional formality, and are not necessarily impressed by either the “decorum” of private banks or by banker status. Millennials want a banker they can identify with, whether in terms of age, mindset or shared interests. In short, someone who could be part of their personal and professional ecosystem, with whom they expect mutual network development.
According to Natixis, “82% of millennials consider that time spent with an advisor is important for their long-term financial success.” They cite the three most important aspects of the relationship: first, to help manage volatility; second, to discuss financial planning with the family; and third, to be able to talk to someone who will listen to their needs.
1 https://asteres.fr/site/wp-content/uploads/2019/08/Aster%C3%A8s-Etude-nouveaux-entrepreneurs-VWebsite-Revu-CAS.pdf
2 https://www.wealthprofessional.ca/news/industry-news/rich-millennials-have-high-confidence-in-advisors-survey-shows/368254
3 https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/wealth-and-asset-management/ey-2021-global-wealth-research-report-optimized-for-web-v2.pdf
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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