In the age of cryptocurrency, robo-advisers and, of course, COVID-19, it’s no wonder the outlook and expectations for wealth management have seen a tectonic shift, altering the how wealth managers advise and interact with clients, especially those of younger generations of blue-collar workers.
The news has been good for some, even in the midst of the pandemic. Fidelity Investments reported in August that retirement account balances have reached all-time highs and the number of 401 (k) and IRA millionaires in the second quarter of 2021 has also reached new highs.
Average 401 (k) balances increased 24% in the 12 months leading up to June 30, 2021, according to reports from Fidelity, to $ 129,300, and IRA account balances were even better, averaging $ 134,900. , up 21% from the same period last year. .
Interest in wealth management services appears to be on the rise, according to a survey by prominent investment advisory firm Vanguard. Last August, Vanguard released the results of an online survey of 1,568 customers nationwide, including responses from 885 millennials, and all with a minimum annual salary of $ 50,000.
The survey gathered their views on financial advice, investing and retirement and how COVID-19 may have changed those views.
Six in 10 Americans reported that the pandemic had negatively impacted their wallets. Yet 24% of Gen Z said the economic downturn from the pandemic actually improved their finances. Meanwhile, 78% of young baby boomers and 67% of millennials have expressed a belief that they are accumulating enough money to meet retirement needs.
ESG investing – the idea of ââplacing your investment funds only in companies with environmental, social and governance strategies that match your own personal values ââand priorities – is important to some clients. Corporate giant JP Morgan Private Bank now provides clients with online information about its belief in “the power of sustainable investing to generate both long-term growth and positive impact.”
Wealth management companies across Kentucky are looking for ways to help clients of all ages cope with their changing expectations, by rolling out new products, targeting young professionals, and continuing to provide mobile and virtual options popularized during the pandemic.
Technology offers convenience, innovation
At PNC Private Bank in Kentucky, Managing Director Ann Georgehead said that advice from wealth managers is tailored to each client, regardless of age, although online platforms like its PNC Private Bank Online offering are popular.
âThis platform allows clients to group accounts based on how they view and organize their finances, pull statements, research transactions and review holdings and allocations,â said Georgehead. âThe platform provides net worth, which reflects the net dollars of a client’s assets and liabilities at PNC, as well as accounts at other financial institutions. It also includes the value of personal items such as jewelry, art, and automobiles.
This convenience is meant to enhance, not replace, local and direct contact between wealth managers and clients, she warned.
âOur business is built on relationships and trust, so technology complements but does not replace personal interaction,â said Georgehead.
John Gardner is Merrill Lynch / Bank of America Market Executive / Managing Director for an area stretching from Evansville, Indiana, to Charleston W. Va. After working for Wells Fargo and Dean Witter-turned-Morgan Stanley, he has been in the business for decades.
Gardner noticed that technology is accelerating and impacting how the industry operates and said it is important to continue to attract top talent to meet changing trends and needs. He said 40% of investors today say they need more advice today than in the past.
âI think the big key is to make sure that we are able to provide this advice, not only in the area of ââour traditional expertise, which is in investing,â he said, âbut also on a more personal level, ensuring that individuals will achieve their goals.
As interest rates plummeted, Gardner said he had made numerous mortgage recommendations over the past 18 months or so, with the average customer saving over $ 46,000 on refinancing.
Technology now allows wealth managers to maintain client relationships in a virtual world if they so choose.
âFirst and foremost, I think the average customer’s bank is now their cell phone,â he said.
Developing and investing in new technology is also important for the company, Gardner noted, as ML / BOA set a record in 2020 for new technology patents filed and granted. The financial services provider has filed 722 patents and received 444 patents in areas such as cybersecurity, artificial intelligence, and improving mobile apps and online experiences.
Financial advisers use video conferencing programs like WebEx to meet with clients. A senior advisor recently told Gardner that he had almost 40 such meetings with clients over a three-week period. He added that he expects the pace to continue increasing rather than slowing down once the pandemic subsides, as customers are now used to this format for most routine interactions.
Training programs, young recruits maintain relationships with clients
In the Vanguard survey, 77% of Gen Z and 69% of Millennials said COVID-19 had made them take a closer look at their own finances, and 61% of Millennials said they wanted to retire before 65 years.
Who better to work with these young investors than the wealth management professionals of the same generation?
At WealthSouth, two young wealth management professionals, John Cadwell and Sam Pollom, shared their experiences of working with clients.
Cadwell is a Wealth Management Advisor in the Company’s Lexington office and Pollom is Director of Inbound Marketing for the Danville office.
âYoung professionals are busy and in my experience looking for someone to help them determine and coordinate their overall financial strategy,â said Cadwell. âThere are many options for investing with new and emerging technologies, and although the young professionals we work with are looking for someone to help them navigate the investments, they want help with consolidation strategies. debt, insurance, estate planning, overall cash flow and retirement planning. “
In a sea of ââavailable information, Cadwell said, clients appreciate an advisor who can serve as a trusted partner in interpreting the data and relating it to their individual situation.
âAdditionally, we can help young clients by communicating with their lawyers and accountants, with the goal of keeping all trusted advisors on the same page,â he said.
Pollom said it can be tempting for young professionals to use digital investment platforms, but having a personal relationship with a wealth management company has many benefits.
âNo matter your age, frequent conversations help clients achieve their goals,â he said. âIt’s also important that your wealth manager meets with you to understand these goals. It is not, and should not be, a one-size-fits-all approach. We are constantly engaging in these conversations with clients, as life events can impact your strategy. It is important to be personal and agile.
Pollom said WealthSouth strives to stay abreast of new technological changes to meet customer preferences. In recent years, this has included an updated website, new social media channels, and digital communication platforms that provide market information.
âOur customer planning is constantly updated,â added Cadwell. âWhile we often meet in person to chat, clients have digital access to their financial plan that they can review from the comfort of their couch. Younger customers like to have this flexibility.
Gardner said a new three-tier training program has been created for ML / BOA, designed to provide multiple career destinations for participants and explore the increasingly complex types of financial advisor positions.
âIt’s not just about knowing stocks and bonds and how to build portfolios anymore,â he said.
By finding the right place for the right people, a younger and more diverse workforce has resulted, he said.
Georgehead said that in an effort to attract young associates, the PNC analyst program recruits college graduates into a three-year training program to learn the inner workings of private banking, “and make sure they have the training and experience to deliver the exceptional customer service we know they expect.
The pandemic sparked financial reflection, reassessment
âDuring the pandemic, (PNC Private Bank) clients adopted new technology that allowed us to meet virtually and securely,â said Georgehead. âWe will continue to offer these virtual options when the world reopens, as some customers have found them beneficial. We’re always on the lookout for new ways to improve the customer experience and offer a wider range of options to meet their needs.
Gardner said clients of his business took time during the pandemic to reassess their financial situation to determine where they were on the journey and where they ultimately wanted to be. For some, he said, it was a long road to retirement, while others found that they were so content at home that they wanted to explore ways to accelerate retirement.
âI think people really started to think a little more about ‘What do I want the rest of my life to be like? and I realized that retirement savings isn’t just a number, âGardner said. âIt’s what you need to achieve the lifestyle you want. “
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