Summary: Implementing strategy to nurture the next generation of high-net-worth customers is important for any community bank. Due to the aging out of the baby boomers, community banks are confronted with the challenge of keeping the later generation among the affluent. The objective is to establish deliberate processes around when to familiarize customers to trust services and how to educate future beneficiaries over time on how to spend and secure their money.
- 11% growth in assets under “robo-advisor” management
- 6% loss of assets under management on which customers receive paid investment advice but don’t give discretionary control.
- 54% of banks meet with their clients’ children less than once a year
Key Takeaways: Although the next generation may not qualify for the highest level of service, it’s crucial to introduce them to early financial preparation by starting to build a trusted relationship and encouraging them to attend family meetings to consider future inheritances. Broadening the customer base and increasing shares of assets can come from community banks evaluating technology as a tool for paramount growth. The technology behind robo-advisors (which are being looked at seriously by wealth advisors) will bring efficiency to some of the trading sides of the business (e.g., accounts that trade in the core portfolio) and extend their market to serve arising affluent individuals efficiently.