Wealth management leverages digital to engage consumers in era of massive wealth transfer

The events of 2020-2021 accelerated the digital transformation of the financial industry. 2022 saw geopolitical volatility and economic uncertainty challenge conventional wisdom. A consumer banking industry famously resistant to digital transformation found ways to remain relevant and competitive to appeal to the needs of digital natives, providing data-driven tech, online tools for more services and better customer engagement. Now, a different echelon of customer is expecting the ease, speed, control and better customer experience of digital solutions. At the same time, the millennial generation has matured into its time of investing, planning and wealth management. Additionally, millennials and Gen X are poised to be on the receiving end of the “great generational wealth transfer” over the next 10 to 15 years. These digital native generations, and other factors, are motivating the wealth management sector to evolve from the pains of friction experiences, manual processes and spreadsheet dependency. Let’s take a closer look at the factors informing how and why wealth managers at financial advisories, banks and credit unions will move into the tech platform era in 2023.

1. The Great Generational Wealth Transfer Is Underway

Over the next decade, an unprecedented amount of personal wealth will change hands, as 70 million Baby Boomers prepare to pass an estimated $15 trillion in assets to the next generations. The sheer volume and complexity of these transactions represent opportunities for financial institutions to capture a new revenue stream. For wealth management institutions to be ready to meet the moment, they will need to master an array of new complexities from tax structures that change with each new administration to the increasingly globalized and environment-social-governance-minded millennial generation that will receive the wealth. Millennials who have endured more than their share of financial turbulence will need the help of banks and other institutions to make the most of their windfall. If advisors, banks and credit unions win a piece of the wealth transfer pie, they need to act fast to leverage better practices to track, analyze and assess risk across asset classes and geographies.

 

continue reading »