Among the oft-repeated defenses of traditional wealth management in response to the rise of digital options is that, no matter what, HNW clients will seek an experienced advisor to help them manage their wealth.
Another key advantage for the old-school crowd is that the new crop of online and mobile investing tools is most likely too down-market for HNW clients.
But researchers at Phoenix Marketing International say their work shows that, among the new generation of the wealthiest, the reality is not what it seems.
"We already see it from data we have on affluent millennials, they are strikingly different from parents on these lines," says David M. Thompson, managing director of affluent practice at Phoenix, which does a monthly survey on investor attitudes among the HNW.
Key among their findings, Thompson says, is that just over half of the investors they spoke to (among those under 35 with $1 million or more in investible assets) said that they were comfortable managing their wealth with their smartphones, and nearly 60% were very comfortable managing their wealth with online tools.
"We're not seeing any specific brand loyalty," he continues. "It's more about ease of use and applicability -- is the tool something they can use quickly, easily and intuitively? Does it make them comfortable right out of the gate, and can be used when needed?"
"Millennials are doing a lot of investing on their own, with no need to directly communicate with advisors," Thompson says. "Many don’t even have one."
The fact that mobile apps have gained acceptance among the young and wealthy should be no surprise to anyone who's followed #RKOI -- but Phoenix reports these wealth management tools are gaining popularity among older investors too, with 36% of investors aged 45-54 in the study reporting their comfort with using them, and 30% of investors aged 35-44.
And there's even broader support among different age groups in the use of online wealth management tools, with 44% overall -- including the oldest investors -- reporting to Phoenix their comfort with using online wealth management.
(The study is ongoing, based on 900 interviews a month, Thompson notes.)
The only digital platform that hasn’t inspired as much confidence for wealth management is social media, with 29% of young HNW investors stating their comfort using it, and every other generation in the single digits, percentage-wise.
But Thompson says the lack of comfort with social media can't be blamed solely on the technology.
"It's sort of there but waiting for market acceptance on both sides," he says. "On the professional side, there are a lot of advisors who still don’t know what to make of social networking as communications tools. That will change as millennials and Gen X becomes more entrenched. There will be demand on the wealth management industry to get a better understanding of using social media in that capacity, and make it a seamless experience for their younger clients."
Thompson says that some millennials may transition into a traditional advisor relationship that their parents had. "But by in large they are fundamentally different than their parents; they work differently and are not going to want to have advisors do it all for them.
"They take on responsibility for themselves, because they've been operating that way, with access to information at their fingertips, empowered by data," he continues. "It's just a different mindset, and that's going to force traditional wealth management to change how they operate."
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