With 2021 moving into the halfway mark, TietoEVRY’s Sameer Datye has listed the biggest wealth trends of 2021.
In the blog post, which is part of a series outlining the biggest trends, head of insurance and wealth solutions Sameer Datye discusses the “advent of the underserved.” He states that investor types are changing and three of the biggest underserved markets are women, millennials and the “covid investors.”
These segments are growing and they are an opportunity for firms to start serving them.
A study from BCG claims women control 32% of the world’s wealth and between 2016 and 2019, they accumulated wealth at a compound annual growth rate of 6.1%. Over the next four years, this is expected to increase to 7.2%.
The blog post states wealth managers will need to find ways of addressing the needs of female investors.
Datye states that trust will be a core part of the segment. He said, “Most women prefer referrals from people they trust while choosing a bank or wealth manager. Trust for them is more important than pure numerical comparisons like management fees, investment performance, taxes, costs etc. A robotic comparison on digital platforms will not suffice.”
Furthermore, Datye explained that investment advice from family and friends is the preferred source of advice and not wealth managers. “This is probably the manifestation of the “trusted source” need as mentioned earlier. Could social investing tools be the answer?”
Other important aspects for female investors is personalisation, with the need for relationship managers to connect on a personal level to understand the user’s aspirations.
Finally, the blog claims female investment behaviour is more focused on long-term goals, taking less risks but being more patient.
As for Covid investors, the blog states this new investor segment is interested in time availability. It said, “This may sound strange, however, the sheer amount of time available for multitasking because of remote office, movement restrictions, social distancing etc., meant more free time for many. Time was spent exploring and learning about stock market action.”
Other areas firms should be aware of is that this segment considers stock markets as an alternative source of income and there is more awareness through social investing tools.
“Now it remains to be seen that whether these newbies will metamorphose themselves to be long term wealth generators. Undoubtedly, they have now tasted blood and it is an opportunity for wealth managers to open wide, a new market which will sustain even after the pandemic has passed.”
The final segment, millennials and the post millennials, hold around 10% of the global wealth, increasing by 16% per annum, Datye said. These investors are digital savvy, avid social media users, enjoy gamification , hybrid advisory and social investing, and are prone to new instruments like cryptocurrencies.
Datye concluded, “Wealth managers (all- large Financial Institutions, boutique and wealth managers, digital-only advisors) need to meet these highly volatile young investors on their own turf. Understanding their tacit motivations and catering to the resultant needs will be the key to success. The trick will be figure out how to create a relationship that is digitally driven, allows self-service and at the same time the advisory value is explicitly visible for the users.”
Read the full blog here.
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