Uploaded byCisco Services
Wealth Management
The document discusses the findings of a Cisco wealth management survey indicating that under-50 investors lack confidence in financial markets and often spread their assets across multiple firms due to dissatisfaction with high fees and low returns. This demographic, which holds 28% of U.S. assets, is tech-savvy and shows a strong interest in utilizing technology and online communities for investment management. With $18 billion in revenue at stake, the wealth management industry is urged to adapt to these investors' preferences for improved service and interaction.
More Related Content
More from Cisco Services
Wealth Management
- 1. Winning the Battlefor the Wealthy InvestorRobert Waitman, DirectorCisco IBSG Financial Services1
- 2. Cisco Wealth Management SurveyInvestors 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 Levels13
- 4. 4Many Now Believethe 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 = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 5. …And 50% BelieveRetirement Will Be DelayedThink 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 = 555Source: Cisco IBSG Economics Practice, November 2010
- 6. 80% Have AssetsSpread Across More Than One Firm…With how many different financial services firms do you have invested assets? 80%Sample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 7. 30% Have NoFinancial AdvisorDo you have a financial advisor to help you make investment decisions? Sample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 8. 8…Because They FeelFees Are Too High While Returns and Trust Are Too LowWhy do you not have a financial advisor? (Top 5)Sample Size = 295Source: Cisco IBSG Economics Practice, November 2010
- 9. Survey Findings: Under-50 Investors—Risks and Opportunities92
- 10. Overall Assets byAge: U.S.10As a Whole, Under-50 Investors Hold 28% of U.S. AssetsSources: U.S. Consumer Statistics, 2007; Cisco IBSG, November 2010
- 11. Percent who expectsignificant increase in investable assets through gift or inheritance in next 10 Years, by age and assets11Wealth Transfer Will Make Under-50 Investors Even WealthierSample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 12. 12Under-50 Investors SpendMore Time Managing Their Investments…Percent who spend 8+ hours per month managing investments (By age)Sample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 13. 13…And Demand SignificantTime and Attention from Their Financial AdvisorsPercent who interact daily or weekly with financial advisor to discuss investments (By age)Sample Size = 705Source: Cisco IBSG Economics Practice, November 2010
- 14. 14Even So, MoreUnder-50 Investors Switched Advisors During the CrisisAge Distribution of Wealthy Investors who Switched Financial AdvisorsSample Size = 705Source: Cisco IBSG Economics Practice, November 2010
- 15. 15Under-50 Investors AreVery Interested In and Comfortable with Technology…Technology attitudes and adoption level (By age)86%76%EarlyMajority49%32%Early AdopterSample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 16. 16…As Shown byTablet PC AdoptionPercent of respondents who own a tablet PC (By age)Sample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 17. 17Under-50’s Interested inUsing Various Technologies to Interact with AdvisorsSource: Cisco IBSG Economics Practice, November 2010
- 18. Survey Findings: Testing Scenarios183
- 19. Scenario 1: Serviceto Provide Access to Firm and Other Experts Receive access to multiple experts with specific expertise such as accountants and lawyersService coordinated by primary financial advisorMeetings take place using high-definition video available in financial advisor’s officeSource: Cisco IBSG, November 2010
- 20. 20Business Context: Under-50Investors Consult Several Professionals…Not including your financial advisor, which of the following professionals do you consult about matters related to your investments?Sample Size = 705Source: Cisco IBSG Economics Practice, November 2010
- 21. 21…Are Interested inUsing 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 Interested30%21%InterestedSample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 22. 22…And Are Willingto Move Investments to Receive ServicePercent who would move investments to access high-definition video from advisor’s office to meet with multiple experts Sample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 23. 23…And Are Willingto Move Investments to Receive ServicePercent 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 overallSample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 24. Scenario 2: Serviceto Give Access to Online Investor CommunityInvestors given access to an online investor community (social network) to discuss strategies, ideas, stock picks with other investorsInvestors could follow trades of other investors, chat online, etc. Source: Cisco IBSG Economics Practice, November 2010
- 25. 25…And Are Opento Joining Investor CommunitiesPercent “interested” and “very interested” in investor community (social network)66%Very Interested23%14%InterestedSample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 26. 26Business Context: Under-50Investors Using Social Networks, BlogsTechnology usage for managing and discussing investments (By age)Sample Size = 1,000Source: Cisco IBSG Economics Practice, November 2010
- 27. A Segmented Approachto Next Generation Wealth ManagementHigh-TouchUltra-High- Net-Worth Under-50s> $ 30 MCapabilities To OfferIn-person, coordinated virtualCustomized services (e.g., Virtual Family Office)High-Net-Worth & Affluent Under-50s> $3 MFrequent in-person, blended with virtualHD video meetings with financial experts and/or family members
- 28. Virtual mtgs., videomessages from advisorMass- Affluent Under-50s$0.5- $1 MPrimarily virtual, blended with in-personTime-efficient FA interactions
- 29. Access to FAvia technology endpoints “Adviser-less” Investors< $0.5MRich online self-service with on-demand FA access
- 30. Investor communitiesOrchestrated self-serviceSelf-ServiceSource:Cisco IBSG, 2010
- 31. Leading Use Casesto Get StartedInternal teaming / mentoring / specialist involvementBringing firm expertise to client and prospects more quickly and more oftenInvolving 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 meetingEstablishing firm as a leader (to clients, employees)Source: Cisco IBSG, 2011
- 32. In Closing....Wealth Managementindustry on the brink of change as clients – especially those under 50 – are not satisfied with existing choicesNew ways of interacting, especially high quality video, seen as a differentiatorWith $18 B of revenue at risk, firms now piloting and deploying these capabilitiesSource: Cisco IBSG, 2011
- 33. For more informationon this research and the Cisco IBSG Financial Services Practice, visit http://www.cisco.com/go/ibsg/financialservices
Editor's Notes
- #12 Note: Base = All respondents
- #13 Note: Base = All Respondnets
- #16 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.
- #17 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.
- #18 Note: Base = Have FA
- #20 Note: TelePresence not specifically mentioned in question
- #21 Note: Base = Have FA
- #23 Base = All RespondnetsNote: Move Investments = Respondents willing to move Some investments through those willing to move all investments
- #24 Base = All RespondnetsNote: Move Investments = Respondents willing to move Some investments through those willing to move all investments
- #25 Note: TelePresence not specifically mentioned in question
- #26 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
- #28 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