A new report by MyPrivateBanking finds that wealthy millennials are showing some striking contradictions in their digital attitudes toward financial matters that wealth managers have to consider when aiming to win younger clients.
On the one hand, millennials are all about using mobile first, loving text and chat, and being intrigued by robo-advisors. On the other, they display some very conservative attitudes and behavior about digital banking and wealth management.
MyPrivateBanking conducted a panel survey in five key markets — the U.S., the U.K., France, Germany and Switzerland — addressing the digital needs and preferences of 1,000 millennials generally with at least $200,000 of household income.
The analysis comprised three wealth segments: mass affluent, affluent and high net worth. For the U.S. respondents, this broke down, respectively, as up to $500,000, $500,000 to $1 million and more than $1 million of investable assets.
Survey respondents wanted innovative communication channels. The high-net-worth segment in particular reported contacting their financial advisor via communication channels such as social media, text or video chat, and messengers.
According to the report, 73% of respondents, and 78% of Americans, used their wealth managers’ mobile apps, but many were unhappy with these, especially the high-net-worth segment, 34% of whom said they refused to use the banking apps.
Asked how satisfied they were with specific functions their bank offered through its mobile channels (14 functions in all), the U.S. subsample had an average satisfaction level of 3.57 on a scale of not at all satisfied (1) to extremely satisfied (5).
Payment options scored highest, 3.96, followed by security and encryption standards, 3.91. Live chat with bank/financial advisor and gamification scored lowest, 3.32 and 3.13.
Robo-advisors had strong potential among well-off millennials as long as human advice was available, according to the survey. It found that awareness of robo-advisors among respondents was at a relatively high level, though a lot of variance showed up among country segments:
- 45% of Americans had heard or read about robos vs. 39% of those in other countries
- 30% of Americans were unfamiliar with the concept vs. 41%
- 9% of Americans knew a lot about robo-advisors vs. 11%
- 16% of Americans knew them in detail vs. 8.5%
“Compared to the other key wealth management markets, U.S. millennials show a greater awareness of robo-advice, probably due to the maturity of the robo market,” the report’s author, Carmela Melone, said in an email message.
“Interestingly, this does not necessarily lead to a greater openness towards robos: 21% state they do not think they will use such a tool, compared to 14% in the other countries.”
Seventy-nine percent of Americans who had at least heard about robos said they were already using such a platform or would consider doing so, compared with 86% in other countries.
According to the survey, actual usage among those who were aware of robos was at 40%. However, 60% expected accessibility to a human advisor when investing with a robo-advisor.
Melone said U.S. millennials were very demanding in this regard, which was “bad news for pure robos.”
“U.S. millennials do also show a greater demand for many robo features and capabilities, such as investment account aggregation, a demo account to try out the tool beforehand, and a comprehensive and well-designed FAQ section, to name only three.”
The survey also compared the country-specific results and found that in many areas, cross-country differences were relatively low for respondents.