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How is the next generation reshaping private banking?
Are the expectations of the next generation really so different from those of their elders when it comes to their finances? In substance, not really. But in form, certainly. Almost 80% of millennials would like to use digital tools to manage their assets in the future, versus only a third of baby boomers, according to research by Ernst & Young1.
This analysis stems from studies led by fifteen or so groups of students from ESCP Paris and IAE Nice in 2021 in the framework of a Capstone Millennials project, launched by Lombard Odier.
The objective of this collaboration was not to conduct a survey or list trends, but rather to work with these students to develop concrete solutions. We aim to implement these solutions into our services and the way in which we interact with clients. This insightful experience enabled us to delve into the financial hopes and concerns of new generations.
Millennials are accustomed to commenting, sharing, recommending and looking for information by themselves. They are demanding and sometimes suspicious when it comes to big brand communications.
Private banks today must offer them real, online and offline investment experiences and above all respond to their desire to be involved and to align their investments with their values.
Discover five key trends and expectations of millennials below:
1. INVOLVEMENT: I want to decide my own investments and challenge the financial analyses
Millennials want to be key players in their wealth management and the majority of them want to be actively involved in decision-making. They often obtain information of their own accord and don't hesitate to challenge their banker on their analyses and proposals. They want a degree of autonomy as well as access to their assets at all times, mainly via digital channels.
2. COMMUNICATION: my bank must adjust to my pace
Communication methods are crucial to millennials They expect a high degree of transparency and access to information at any time. This does not mean they are looking for a digital-only relationship. They appreciate face-to-face contact for matters that require careful thought and discussion, but for everyday matters they prefer email or instant messaging. In their eyes, it’s the institution that must adapt to their preferred channels and habits, and not the other way round. They expect a high degree of reactivity, but they also want to make contact through less formal channels.
3. KNOWLEDGE: I want to understand what I am investing in
A strong desire to learn emerged from all the surveys. Millennials don’t just want to invest in opportunities; they want to understand what makes them opportunities. Their age, their lack of financial awareness – which they themselves admit to – and their habits as consumers of content, mean they expect clear, educational explanations and prefer short, digital formats.
4. NETWORK: I prefer a banker I can identify with
Even though they expect a high level of experience and professionalism, the next generation want to detach themselves from certain formalities and aren’t impressed by the “decorum” of private banks. Also, they want a banker they can identify with, whether it’s 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 a mutual development of their network.
5. SUSTAINABILITY: measuring the investment impact is key
Sustainability is a major aspect. It goes far beyond awareness. The next generation want specific, innovative investment solutions, designed thematically, in order to deal with the issues that concern them the most and align their investments to their values. Investing via a sustainable strategy is not enough for them. They want to be able to gauge the concrete effects and the impact, understand the mechanisms and their footprint and avoid greenwashing. To them, sustainable investing does not mean relinquishing returns. Millennials want financial performance, sustainability and they favour clear reporting on impact – through digital and interactive tools.
Read also: Millennials stay true to their investment values
In these fast-changing times with rapid digitalisation, sustainability and ever-changing models, our clients can teach us a lot. They inspire us and challenge us every day. Their needs are constantly changing, but their initial expectations remain much the same: they want to protect and grow their wealth. And it is up to us to strike the right balance between heritage and innovation.
The Capstone Millennials in a nutshell
Launched as an initiative of Lombard Odier’s French speaking teams in Europe, Capstone Millennials belongs to Lombard Odier’s projects that are aimed at anticipating and gaining a better understanding of the needs of their future clients. The groups of students from the Master’s in Wealth Management at ESCP Paris and IAE Nice who have worked on this project have based their work on market data, quantitative and qualitative studies, and some thirty individual interviews with millennials with a wide range of profiles (entrepreneurs, influencers, heirs, etc.). The project is therefore resolutely part of a more qualitative approach, based on personalised exchanges, rather than a quantitative or exhaustive ones.
1 Ernst & Young, How digitalization can drive personalization in wealth management, April 2021
Important information
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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