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Wealth Management

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How winning the Battle for the Wealthy Investor, a new Cisco IBSG Study Uncovers Significant Opportunity To Address Needs of Wealthy Under-50 Investors

How winning the Battle for the Wealthy Investor, a new Cisco IBSG Study Uncovers Significant Opportunity To Address Needs of Wealthy Under-50 Investors

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  • Note: Base = All respondents
  • Note: Base = All Respondnets
  • Note: Uses (modified) technology adoption cycle from Geoffrey Moore’s “Crossing the Chasm.”Respondents self-identified their attitudes toward technology through the following questions:Early Adopter = I know the names of the latest new consumer technology products before my friends and familyand am typically among the first of my friends and family to purchase the latest technologyproducts on the market.Early majority = I’m interested in new consumer technology, and I own a few innovative products, but not as manyas the typical technology enthusiast.Late Majority = I typically wait to purchase a new consumer technology product until it is proven, and mosteveryone is using it.Laggard = In general, I am the last of my friends and family to know the names of new cutting-edgetechnology products and I avoid new technology products as long as I possibly can.
  • Note: Uses (modified) technology adoption cycle from Geoffrey Moore’s “Crossing the Chasm.”Respondents self-identified their attitudes toward technology through the following questions:Early Adopter = I know the names of the latest new consumer technology products before my friends and familyand am typically among the first of my friends and family to purchase the latest technologyproducts on the market.Early majority = I’m interested in new consumer technology, and I own a few innovative products, but not as manyas the typical technology enthusiast.Late Majority = I typically wait to purchase a new consumer technology product until it is proven, and mosteveryone is using it.Laggard = In general, I am the last of my friends and family to know the names of new cutting-edgetechnology products and I avoid new technology products as long as I possibly can.
  • Note: Base = Have FA
  • Note: TelePresence not specifically mentioned in question
  • Note: Base = Have FA
  • Base = All RespondnetsNote: Move Investments = Respondents willing to move Some investments through those willing to move all investments
  • Base = All RespondnetsNote: Move Investments = Respondents willing to move Some investments through those willing to move all investments
  • Note: TelePresence not specifically mentioned in question
  • Note: Base = All Survey RespondentsInterested = 7 and 8 on 10 point scale where 1 = Not at all interested and 10 = Extremely interestedVery interested = 9 and 10 on 10 point scale
  • Success with a new strategy for wealth management will require a segmented approach and will depend on the customer focus for a particular bank or wealth management firmBased on our survey we have found four segments of the wealthy under 50 market that have different needs:The Ultra-High-Net-Worth investors are typically well served today. Banks can afford to have a high touch face-to-face approach to these investors. Based on the input from these investors in the survey the most important addition that banks can make is to broaden the exposure to not only the main wealthy person but also to that individual’s family members. Currently most interactions happen between the financial advisor and the ultra-high net worth individual. These investors would however like to involve additional family members for discussion having significant financial implications for the family wealth. These famlies are typically spread across a large geographical area. Using high definition video solutions to connect multiple family members in the same meeting with the financial adviser would be highly valued by investors. This would in addition limit the risk for a bank of only being linked to one wealthy individual per familyThe main battle for the wealthy will be for the next two segments in the pyramid: the High- Net-Worth investors and the Mass-Affluent investors. These are the investor categories where banks cannot afford the same level of high touch face-to-face interactions as with the Ultra High-Net Worth segment. These are the segments that primarily ask for a new approach to interactions with their Financial Adviser. Using technology as an enabler banks can provide both the frequency, the quality and the personalization of advice that will be important differentiators to win this segment. In the adviser-less segment the bank cannot afford a model with frequent personalized interactions. In this segment the key approach will be to find a way provide value and differentiaton as the orchestrator of self-service. A bank would benefit from being branded as a value-added contributor to interactions between investors who come together in investor communities enabled by social media
  • Transcript

    • 1. Winning the Battle for the Wealthy Investor
      Robert Waitman, Director
      Cisco IBSG Financial Services
      1
    • 2. Cisco Wealth Management Survey
      Investors lack confidence in the markets and they have spread their assets across many firms and advisors.
      The Under-50 investor represents a huge opportunity for firms….significant assets, very involved clients, but willing to leave.
      Technology (which they already use in their daily lives) is one of the differentiators….with $18B of revenue at stake, the time to act is now.
      2
    • 3. Survey Findings: Post-Crisis Attitudes and Confidence Levels
      1
      3
    • 4. 4
      Many Now Believe the Playing Field Is Not Level…
      The financial markets are a level playing field where investors like me have a fair chance to succeed.
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 5. …And 50% Believe Retirement Will Be Delayed
      Think about the effects of the recent global economic crisis on the performance of your investments. Will the crisis cause you to delay your retirement date?
      50%
      Sample Size = 555
      Source: Cisco IBSG Economics Practice, November 2010
    • 6. 80% Have Assets Spread Across More Than One Firm…
      With how many different financial services firms do you have invested assets?
      80%
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 7. 30% Have No Financial Advisor
      Do you have a financial advisor to help you make investment decisions?
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 8. 8
      …Because They Feel Fees Are Too High While Returns and Trust Are Too Low
      Why do you not have a financial advisor? (Top 5)
      Sample Size = 295
      Source: Cisco IBSG Economics Practice, November 2010
    • 9. Survey Findings: Under-50 Investors—Risks and Opportunities
      9
      2
    • 10. Overall Assets by Age: U.S.
      10
      As a Whole, Under-50 Investors Hold 28% of U.S. Assets
      Sources: U.S. Consumer Statistics, 2007; Cisco IBSG, November 2010
    • 11. Percent who expect significant increase in investable assets through gift or inheritance in next 10 Years, by age and assets
      11
      Wealth Transfer Will Make Under-50 Investors Even Wealthier
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 12. 12
      Under-50 Investors Spend More Time Managing Their Investments…
      Percent who spend 8+ hours per month managing investments (By age)
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 13. 13
      …And Demand Significant Time and Attention from Their Financial Advisors
      Percent who interact daily or weekly with financial advisor to discuss investments (By age)
      Sample Size = 705
      Source: Cisco IBSG Economics Practice, November 2010
    • 14. 14
      Even So, More Under-50 Investors Switched Advisors During the Crisis
      Age Distribution of Wealthy Investors who Switched Financial Advisors
      Sample Size = 705
      Source: Cisco IBSG Economics Practice, November 2010
    • 15. 15
      Under-50 Investors Are Very Interested In and Comfortable with Technology…
      Technology attitudes and adoption level (By age)
      86%
      76%
      Early
      Majority
      49%
      32%
      Early
      Adopter
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 16. 16
      …As Shown by Tablet PC Adoption
      Percent of respondents who own a tablet PC (By age)
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 17. 17
      Under-50’s Interested in Using Various Technologies to Interact with Advisors
      Source: Cisco IBSG Economics Practice, November 2010
    • 18. Survey Findings: Testing Scenarios
      18
      3
    • 19. Scenario 1: Service to Provide Access to Firm and Other Experts
      Receive access to multiple experts with specific expertise such as accountants and lawyers
      Service coordinated by primary financial advisor
      Meetings take place using high-definition video available in financial advisor’s office
      Source: Cisco IBSG, November 2010
    • 20. 20
      Business Context: Under-50 Investors Consult Several Professionals…
      Not including your financial advisor, which of the following professionals do you consult about matters related to your investments?
      Sample Size = 705
      Source: Cisco IBSG Economics Practice, November 2010
    • 21. 21
      …Are Interested in Using High-Definition Video…
      Percent “interested” and “very interested” in using high-definition video in financial advisor’s office to meet with multiple experts
      63%
      Very
      Interested
      30%
      21%
      Interested
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 22. 22
      …And Are Willing to Move Investments to Receive Service
      Percent who would move investments to access high-definition video from advisor’s office to meet with multiple experts
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 23. 23
      …And Are Willing to Move Investments to Receive Service
      Percent who would move investments to access high-definition video from advisor’s office to meet with multiple experts
      $18.6 B (Under-50s)
      $28.6 B overall
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 24. Scenario 2: Service to Give Access to Online Investor Community
      Investors given access to an online investor community (social network) to discuss strategies, ideas, stock picks with other investors
      Investors could follow trades of other investors, chat online, etc.
      Source: Cisco IBSG Economics Practice, November 2010
    • 25. 25
      …And Are Open to Joining Investor Communities
      Percent “interested” and “very interested” in investor community (social network)
      66%
      Very
      Interested
      23%
      14%
      Interested
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 26. 26
      Business Context: Under-50 Investors Using Social Networks, Blogs
      Technology usage for managing and discussing investments (By age)
      Sample Size = 1,000
      Source: Cisco IBSG Economics Practice, November 2010
    • 27. A Segmented Approach to Next Generation Wealth Management
      High-Touch
      Ultra-High-
      Net-Worth Under-50s
      > $ 30 M
      Capabilities To Offer
      In-person, coordinated virtual
      • Customized services (e.g., Virtual Family Office)
      High-Net-Worth & Affluent Under-50s
      > $3 M
      Frequent in-person, blended with virtual
      • HD video meetings with financial experts and/or family members
      • 28. Virtual mtgs., video messages from advisor
      Mass-
      Affluent Under-50s
      $0.5- $1 M
      Primarily virtual, blended with in-person
      • Time-efficient FA interactions
      • 29. Access to FA via technology endpoints
      “Adviser-less” Investors
      < $0.5M
      • Rich online self-service with on-demand FA access
      • 30. Investor communities
      Orchestrated self-service
      Self-Service
      Source: Cisco IBSG, 2010
    • 31. Leading Use Cases to Get Started
      Internal teaming / mentoring / specialist involvement
      Bringing firm expertise to client and prospects more quickly and more often
      Involving experts to close deals more quickly
      “Virtual” offsite for client VIPs (build loyalty)
      Staying well connected to client despite their location (reduce attrition)
      Connecting to next generation / Holding family financial meeting
      Establishing firm as a leader (to clients, employees)
      Source: Cisco IBSG, 2011
    • 32. In Closing....
      Wealth Management industry on the brink of change as clients – especially those under 50 – are not satisfied with existing choices
      New ways of interacting, especially high quality video, seen as a differentiator
      With $18 B of revenue at risk, firms now piloting and deploying these capabilities
      Source: Cisco IBSG, 2011
    • 33. For more information on this research and the Cisco IBSG Financial Services Practice, visit http://www.cisco.com/go/ibsg/financialservices

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