The next generation of wealthy individuals are being driven towards sustainable investing and the desire for a more personalised digital service. Many are also eager to implement their financial plans at an earlier age than their parents.
The onus is on wealth managers, therefore, to ensure they are in the best position possible to meet their client base’s changing needs.
INVESTING WITH A CONSCIENCE
Allocations into environmental, social and governance-based funds (ESG) are dominating the investment landscape and are particularly popular with millennials seeking investments aligned to their morals, beliefs, and agenda to drive tangible change.
The Covid-19 pandemic has further fuelled this theme, as sustainable funds have generally performed better than traditional offerings over the past 12 months. This puts any preconceived ideas that by investing responsibly, returns were sacrificed to bed.
Those that earn their place with the next generation of wealthy individuals will be in a position to offer strategies around purpose-based investing. London and Capital’s three-pronged approach to ESG within portfolios means these investors will be well assisted in allocating capital to companies that reflect their interests and values.
While integration, negative screening and thematic allocation are important factors in developing a robust and tailored ESG investment strategy, the younger generation is also demanding a higher degree of access, engagement and transparency with an investment team. Simply, they want to be more involved than their parents in the investment decisions.
Sustainable investing has also matured from simple screening techniques or stock exclusion. The analytics behind the strategies has to be both trustworthy and reliable for the modern wealthy family. Greenwashing has become a popular topic for debate in recent years, with investors now demanding that ESG strategies and methodologies be clearly demonstrated.
This is a global trend: in the US, Workiva found that 72% of millennials want to know whether a company’s operations reflect their own social and moral beliefs before investing.
UTILISING ADVANCES IN TECHNOLOGY
But the modern wealthy family isn’t focused on ESG alone. Innovation and advances in technology are also playing a significant role in wealth strategies as high-net-worth clients are increasingly likely to expect digital channel integration from their wealth managers.
Artificial intelligence (AI), big data and predictive analytics are all tools that investors want their wealth manager to have implemented in their strategies. Alongside this, the demand for personalised wealth plans is also on the rise.
The stay-at-home economy has advanced many of the pre-existing digital trends in the wealth sector. It’s not just high-net-worth individuals who are becoming accustomed to technologies such as cloud computing, artificial intelligence, and voice recognition when managing finances.
Technology that simplifies processes and navigates complex regulation on the part of the wealth manager also serves the high-net-worth individual’s desire for that higher level of engagement.
Mobile apps, robo-advisers and AI tools provide individuals with more control than traditional financial management methods.
Mobile portfolio management apps, for instance, provide instant access to information on all a client’s investments, from ISAs to personal capital. The adoption of open banking practices will allow multiple apps to sync with existing accounts, seamlessly.
London & Capital has already harnessed this to some degree and offered clients access alongside greater depths of engagement and transparency from within the investment teams.
But this is just the start.
The trends indicate a significant shift away from product-focused wealth management to customer service driven strategies over the next few years. This changing landscape, driven by the wants and needs of the next generation of high-net-worth individuals and families, will focus more on high levels of digitisation, efficiency and personalisation.
For further information or to speak to a member of the staff give us a call on +44 (0) 207 396 3200 or alternatively e-mail invest@londonandcapital.com
