Wealth firms need to have the right investment mix and digital strategy to attract modern investors, according to our latest report.
- While it’s a credit to wealth firms that retail investors are happy with their service through recent market volatility, there is scope for them to better adapt to the needs of younger generations.
- To engage successfully with Gen X and Millennial investors, wealth firms must offer information about alternative assets and play to their use of digital and social channels as sources of investment ideas.
- Our report finds that wealth firms have an opening to differentiate themselves and recommends five ways to attract and engage investors.
Through turbulent markets, advances in technology and new alternative assets shaking up the industry, one constant for wealth firms who want to create and maintain a competitive advantage is to make things personal.
Our latest report, Bridging the generation gap: Five ways to attract investors and create competitive advantage is based on a survey of more than 1,000 retail investors. We uncover investors’ views on a wide range of topics from digital experiences, advisor relationships and their appetite for alternative investments.
Nine out of ten (92%) investors say they are satisfied with their advisors. Investors across generations are happy with the service they’ve received over the past few years of volatile financial markets, but drilling down into the data reveals that wealth firms are more in tune with Baby Boomers than Gen X and Millennials.
Baby Boomers are more satisfied than Gen X and Millennials with their investing experience
There is scope for wealth firms to better adapt to the needs of the modern investor and younger generations looking for differentiated digital experiences and investment opportunities.
The desire for differentiated alternative investments
To attract and engage successfully with modern investors – specifically Gen X and Millennial investors – wealth firms must provide information and education about cryptocurrencies, ESG investments and other alternative investments. These asset classes do not hold the same appeal for Baby Boomers, according to our research.
Take ESG investments – 23% of Millennials and 22% of Gen X say they would like to discuss these investments with their financial advisors. By contrast, Baby Boomers are less interested, with only 9% wanting a discussion.
We see similar themes across other alternatives – from hedge funds to private investments and real estate. Notably, all generations of investors would like more information about index strategies, presenting an untapped opportunity for wealth firms.
33% of Millennial investors are interested in receiving more information on NFTs, while 23% of Gen X and only 4% of Baby Boomers show an interest.
Social media to generate investment ideas
In today’s digital age, it is clear just how important digital and social channels are as a source of information for all investors, but especially younger generations. Our report shows that 33% of Millennials and 21% of Gen X use social media to gather investment insights and ideas, compared with only 3% of Boomers. This highlights an opportunity and area for growth for advisors and firms.
Younger generations use a variety of social media channels such as Reddit, TikTok or Twitter. They also have specific preferences when it comes to communication channels. For instance, Gen X would just as soon receive an email as a phone call, with 55% of them saying they prefer phone calls versus 56% for email. Again, this shows the growth in digital communication channels.
Attracting the modern investor
At a time when modern investors are embracing new investment products and digital content, wealth firms have an opportunity to present the value of their offerings by personalising advice and strategies to meet unique investor needs and goals.
Our report concludes by highlighting five ways – ranging from service personalisation to identifying 2023’s long-term investment opportunities – for firms to differentiate themselves and help to bridge the generation gap.
Republication or redistribution of LSE Group content is prohibited without our prior written consent.
The content of this publication is for informational purposes only and has no legal effect, does not form part of any contract, does not, and does not seek to constitute advice of any nature and no reliance should be placed upon statements contained herein. Whilst reasonable efforts have been taken to ensure that the contents of this publication are accurate and reliable, LSE Group does not guarantee that this document is free from errors or omissions; therefore, you may not rely upon the content of this document under any circumstances and you should seek your own independent legal, investment, tax and other advice. Neither We nor our affiliates shall be liable for any errors, inaccuracies or delays in the publication or any other content, or for any actions taken by you in reliance thereon.
Copyright © 2023 London Stock Exchange Group. All rights reserved.
The content of this publication is provided by London Stock Exchange Group plc, its applicable group undertakings and/or its affiliates or licensors (the “LSE Group” or “We”) exclusively.
Neither We nor our affiliates guarantee the accuracy of or endorse the views or opinions given by any third party content provider, advertiser, sponsor or other user. We may link to, reference, or promote websites, applications and/or services from third parties. You agree that We are not responsible for, and do not control such non-LSE Group websites, applications or services.
The content of this publication is for informational purposes only. All information and data contained in this publication is obtained by LSE Group from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, such information and data are provided "as is" without warranty of any kind. You understand and agree that this publication does not, and does not seek to, constitute advice of any nature. You may not rely upon the content of this document under any circumstances and should seek your own independent legal, tax or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither We nor our affiliates shall be liable for any errors, inaccuracies or delays in the publication or any other content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the publication and its content is at your sole risk.
To the fullest extent permitted by applicable law, LSE Group, expressly disclaims any representation or warranties, express or implied, including, without limitation, any representations or warranties of performance, merchantability, fitness for a particular purpose, accuracy, completeness, reliability and non-infringement. LSE Group, its subsidiaries, its affiliates and their respective shareholders, directors, officers employees, agents, advertisers, content providers and licensors (collectively referred to as the “LSE Group Parties”) disclaim all responsibility for any loss, liability or damage of any kind resulting from or related to access, use or the unavailability of the publication (or any part of it); and none of the LSE Group Parties will be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, howsoever arising, even if any member of the LSE Group Parties are advised in advance of the possibility of such damages or could have foreseen any such damages arising or resulting from the use of, or inability to use, the information contained in the publication. For the avoidance of doubt, the LSE Group Parties shall have no liability for any losses, claims, demands, actions, proceedings, damages, costs or expenses arising out of, or in any way connected with, the information contained in this document.
LSE Group is the owner of various intellectual property rights ("IPR”), including but not limited to, numerous trademarks that are used to identify, advertise, and promote LSE Group products, services and activities. Nothing contained herein should be construed as granting any licence or right to use any of the trademarks or any other LSE Group IPR for any purpose whatsoever without the written permission or applicable licence terms.