New research reveals profound shifts in investor needs and behaviours that will redefine the wealth industry

Wealth Management Study - Recordsure

New global study by ThoughtLab reveals the dramatic changes the COVID-19 pandemic caused in investor attitudes, behaviours, and expectations. Wealth and asset management firms will need to revise their thinking about customers and introduce a more personalised approach to succeed.

ThoughtLab’s study of 2,325 investors and 500 wealth management firms worldwide shows that the pandemic has upended traditional ways of thinking about investors. The research was carried out in partnership with Recordsure, TCC Group, Deloitte, eToro, FIS, Salesforce, Appway, HCL, LexisNexis Risk Solutions, Refinitiv, and Publicis Sapient.

The COVID-19 pandemic has caused dramatic changes in investor attitudes, behaviours, and expectations, overturning conventional wisdom in the wealth management industry about how providers should best serve their clients. To succeed in this new marketplace, wealth and asset management firms will need to revise their thinking about customers and take a more personalised approach to meet their product and service needs. 

Busting the myth

The research reverses prevailing views about investors:

  • Myth 1: Digital is for young, mass market investors. The study shows little difference in digital tastes. The proportion of investors preferring to use a mobile app to engage with their wealth firms is identical for the ultra-rich, baby boomers, and millennials, at 89%. 
  • Myth 2: Millennials only want to do things digitally. Another myth. Millennials, like older generations, want personal contact when investing: 46% of millennials prefer face-to-face meetings and 40% prefer phone calls. 
  • Myth 3: Older and richer investors care less about ESG. Not so. Only 10% of millennials are planning to invest in green bonds over the next two years, versus 15% of boomers – and 50% of billionaires. Likewise, only 22% of millennials plan to invest in ESG funds, versus 32% of boomers, and 36% of billionaires. 
  • Myth 4: Women know less about investing and are more risk-averse than men. The study shows that 24% of women have high knowledge of wealth management vs 16% of men and that percentages of both genders are willing to make high- or very high-risk investments are largely the same. 

Watching the well-established Wealth and Asset Management industry go through this digital revolution at a breathtaking speed is elevating. As a result, investors now have the advantage of a wide range of communications channels to engage with their advisors, simply using the methods they're most at ease with.

A watershed event for investors

The comprehensive research programme included a worldwide survey and revealed that the pandemic was a watershed event that reshaped investor views in many areas.

These are some of the insights from Wealth and Asset Management 4.0 study:  

  • Investments: The pandemic made risk mitigation a top goal for half of investors and prompted about 4 out of 10 investors to include family members in more wealth decisions and to turn their attention to active investing and holistic financial planning. 
  • Relationships: About a quarter of investors reported fractured relationships with their advisors due to inadequate personal service. To mitigate risks, 27% of investors distributed accounts to more firms; among billionaires, it was almost twice that number. The trend will continue, with 4 in 10 investors expecting to move money to another firm within the next two years. 
  • Digital interaction: The pandemic made digital access a higher priority for 40% of investors and put 30% more at ease working through video and digital tools. In the next two years, three-quarters of investor interactions with advisors will be through digital channels – although face-to-face meetings will also increase. 
  • Products and services: More than two-thirds plan to put money in alternative investments over the next two years, and many more will invest in other specialised products such as IPOs, tax-exempt instruments, and ESG funds. Many also plan to seek personalised planning and holistic advice and draw on non-investment services like insurance, tax advice, and loans. 
  • Fees: With more time to spend on investing during the pandemic, about a third of investors reevaluated what they pay. Fewer than 4 out of 10 investors are happy with their wealth management firms’ fees and fee structures. Only about a third understand how their advisors are compensated. 

Our study shows that wealth management providers will need to replace their assumptions about age and wealth with a new client lens focusing on personal needs and life stages. The smartest firms will not just democratise their products and services, but also their views about investors.

An eBook with the results from both surveys will be released in November. For further updates on the program and to access the analysis, visit Wealth and Asset Management 4.0. 

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