With some $40 trillion expected to transition to younger generations in the U.S. in coming decades, wealth management firms will need to grow their online investing capabilities and provide more convenient service in order to capture and retain younger investors, according to a study released Monday.
The report issued by Aite Group and Scivantage, “The Race for Next-Generation Assets: Can Banks Maintain Their Lead?” said financial institutions that can understand and address the investment needs of this emerging investor segment will be best positioned to capture their future wealth.
“Gen-Xers and Gen-Yers have been far less loyal to their investment providers over the last few years compared to Boomer and Silent Generation investors, indicating that young consumers have yet to find their ideal investment providers,” Sophie Schmitt, Aite Group senior analyst, said in a statement.
The study found that 44% of Gen-X and Gen-Y investors surveyed had shifted assets to another investment firm or switched investment providers owing to the availability of online tools.
Online investing capabilities, now second nature to younger investors, will be a requirement for banks that want to attract future high-net-worth or current affluent members of this segment, Chris Psaltos, vice president for product management at Scivantage, said in the statement.
“As younger, tech-savvy investors look for greater control of the investment decision-making process, wealth management firms—particularly banks—must ensure that their online investment platforms are keeping pace with the latest consumer technology innovations.”