Youth Shall Be Served
According to Cogent Research, younger Americans are sharing more of the wealth. The percentage of affluent Americans drawn from the ranks of Generations X and Y grew to 34% in 2012, up slightly from 2011 and considerably from 2010. (“Affluent” is liberally applied to those with at least $100,000 in investable assets.) Meanwhile, the number among the Silent Generation is slowly contracting, while baby boomers (those from both the first and second waves) still represent the largest segment of affluent Americans. As detailed in Cogent’s report, Building a Pipeline with Young Investors, this transition presents advisors with a great opportunity to look for younger investors who are still in their accumulation stage and haven’t yet reached their peak earning years.
Technology As A Strategic Focus
Client-related technology will be the strategic focus of wealth managers over the next two to five years, according to Ernst & Young LLP’s 2012 Wealth Management Survey. Wealth management firms already allocate a hefty chunk of their budgets to client services, but the survey found that less than one-third of firms believe their current client-related technology does the trick.
More than 75% of wealth management firms surveyed said they have initiatives in place aimed at increasing face time with clients. They said the benefit of adding support resources quickly outweighs the cost.
Another roughly 75% of respondents said they plan to invest in mobile tools to increase advisor collaboration and effectiveness. Larger firms generally said they intend to use mobile technology to deepen client relationships by providing greater access to information, while smaller firms see mobile applications as a way to introduce new products and services, as well as boost sales.
In addition, 38% of firms said they view regulatory compliance issues as their chief operational challenges. So firms are spending 22% of their overall operating budget on areas related to compliance and risk management.
“Wealth management firms should ask themselves: What’s working? What isn’t working?” said Marcelo Fava, a principal at Ernst & Young, in a press release. “Is there opportunity here to have a more dedicated technology organization for our advisors? There is no silver bullet. Firms need to focus on balancing the benefits and limitations of each model when making sourcing decisions and then successfully roll out and integrate capabilities into their existing environment.”
The survey from Ernst & Young, a global financial services company, contains the views of 40 senior-level wealth management professionals across North America and Latin America.