Wealth Management Industry Not Sufficiently in Tune with the Needs of Young Investors, According to Aite Group Research

More than 1,000 US investors surveyed reveal convenience and online tools are key reasons for Gen-Xers and Gen-Yers to shift assets between financial institutions

JERSEY CITY, N.J.--()--Scivantage®, an independent financial technology provider with proven expertise in online brokerage, tax and portfolio reporting and wealth management applications, and Aite Group, a leading independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry, announced today the results of a report titled, “The Race for Next-Generation Assets: Can Banks Maintain Their Lead?” The study examines the investing preferences of younger generations and the impact they may have on long-term growth opportunities for wealth management firms. In particular, the research focuses on the importance of banks to the younger investor population and discusses how firms can maintain their advantage in the race to capture next-generation assets.

With more than $40 trillion expected to transition to younger generations in the U.S. over the next several decades, wealth management firms will need to focus on this new wave of investors and reevaluate their current service, support and technology models. Financial institutions that can understand and address the unique investment needs of this emerging segment will be best positioned to capture their future wealth, according to the research.

“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,” said Sophie Schmitt, Aite Group Senior Analyst, Wealth Management. “Banks seeking to maximize their ability to retain and grow share of wallet with young investors should work on growing their online investing capabilities and providing more convenient services.”

Additional key insights include:

  • 40% of young investors still consider a bank to be their primary investment provider. By contrast, only 20% of young investors consider an online brokerage firm to be their primary investment provider despite their strong adoption of online trading
  • 44% of Gen-X and Gen-Y investors surveyed shifted assets to another investment firm or switched investment providers due to availability of online tools
  • 42% of Gen-X and Gen-Y respondents said their bank would need to offer more convenient services and/or more robust online brokerage/trading capabilities in order for them to move more assets to their bank
  • About 30% of young investors trade more than 25 times per year and slightly less than 70% trade online more than five times per year
  • The No. 1 reason clients shift investments to another firm is fees, such as those tied to accounts, financial advisory and asset management

“Online investing capabilities are now second nature to Gen-X and Gen-Y investors and will be a requirement for banks that want to attract future high-net-worth or current affluent members of this segment,” said Chris Psaltos, Vice President, Product Management, Scivantage. “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.”

Listen to a recent Webinar, featuring Psaltos and Schmitt, discussing what wealth management firms can do to address this emerging market.

This report is based on Aite Group’s December 2011 survey of more than 1,000 U.S. investors who hold a minimum of US$25,000 in investable assets and have access to online trading capabilities. The sample is representative of approximately half of the U.S. population.

About Scivantage

Scivantage is an independent financial technology provider with proven expertise in online brokerage, tax and portfolio reporting, and wealth management applications that automate and integrate key business practices for broker-dealers, mutual funds, custodians and prime brokers. From trade order processing and account management to comprehensive cost basis reporting and automated account opening, maintenance and funding, Scivantage’s back-office independent solutions enable financial institutions and financial professionals to dramatically reduce operational costs, strengthen customer relationships and improve productivity. For more information, please visit www.scivantage.com or contact us at +1.866.724.8268.

Enabling Financial Transactions. Automate. Connect. Transact.

About Aite Group

Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, securities & investments, and insurance, Aite Group’s analysts deliver comprehensive, actionable advice to key market participants in financial services. Headquartered in Boston with a presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they remain at the forefront of industry trends. For more information, please visit http://www.aitegroup.com.

Contacts

Scivantage
Staci Moore, +1-646-867-0380
Director, Corporate Marketing
staci.moore@scivantage.com
or
Cognito
Oksana Poltavets, +1-646-395-6300
scivantage@cognitomedia.com

Release Summary

Wealth management industry not sufficiently in tune with the needs of young investors, according to Scivantage and Aite Group research.

Contacts

Scivantage
Staci Moore, +1-646-867-0380
Director, Corporate Marketing
staci.moore@scivantage.com
or
Cognito
Oksana Poltavets, +1-646-395-6300
scivantage@cognitomedia.com