Simon-Kucher & Partners Survey Reveals Consumption Preferences of Gen X, Millennial and Traditional Client Segments for Wealth Management Services

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AUM does not reflect differences in client needs; wealth management should offer choices, and let client choose

New York / Bonn – The strategy and marketing consulting firm Simon-Kucher & Partners released results from its Re-Wiring Wealth Management report and survey. The report shares important data on client consumption preferences for wealth management services including what they value, their expectations and how they differ in terms of needs, preferences and willingness to pay for financial advice.

A key theme that emerged from the survey was that wealth management clients overwhelmingly want the ability to tailor how they receive financial planning service. Clients want to personalize how often they meet with their advisors, the way they interact with their advisors and the level of details in reports. We also found that clients highly value face-to-face meetings and there is a significant willingness-to-pay for human interaction.

“In a world where clients increasingly expect and demand choice, the wealth management profession alarmingly extends only one proposition priced as a percentage of assets under management (AUM),” said Matthew Jackson, director at Simon-Kucher & Partners. “We must build propositions that reflect the variegated needs and preferences of clients, and this means offering choices within a given offering – not just between our offering and the next-cheapest competitor.”

A client-centric proposition in wealth management is imperative for future growth. The rapid growth of low-cost robo-advisers, digital technologies and new entrants will continue to intensify competition and pricing pressure in wealth management. The demographic profile of the typical wealth management client is also shifting towards a younger, more tech savvy investor who expects more options, personalization and clarity in value communications. Exacerbating the disruption further is the slowing rate of organic growth.

A key objective of the survey was to develop a better understanding of the needs and preferences of client segments that have traditionally been underserved by the wealth management profession. These include the Gen X and Millennial segments who are between 25 and 54 years old and earn more than $50,000 a year. This demographic accounted for a majority of our survey population.

The following are key findings from the survey:

  • More than 83% of survey respondents valued financial planning equally or more than investment management services. It is a myth that clients are ‘return seekers’, that they are not interested in planning, do not value it, and are only interested in ‘beating the market.’
  • More than 50% of survey respondents prefer to pay for financial planning on a pay-as-you-go or fixed monthly fee. The traditional %AUM fee structure garnered no more than 28% of responses for the preferred price model, whereas the (rarely offered) time-based rate structure was selected as preferred by 24% of respondents.
  • Gen X and Millennial Survey respondents are interested in unconventional services including advice on buying/selling a home, job/career evaluation and planning, and financial education from their financial advisors.
  • A majority of clients want the ability to tailor how they receive ongoing support services from their advisors. More than 59% of survey respondents said they want to have the ability to meet with their advisors, whenever they need to.
  • Clients have clear favorites when it comes to channels of interaction. The preferred channels are: face-to-face (39%), email (29%) and phone (23%).

The full report is available here.

Survey Methodology: The Re-Wiring Wealth Management report surveyed 1,096 U.S. based adults in 2017. The panel was largely (62%) made up of Gen X and Gen Y individuals between the ages 25 and 54. Baby Boomers and the Silent Generation (individuals who are 55-years or older) together made up 38% of the panel. The income distribution the survey panel was skewed above the median U.S. household income with 46% of survey respondents earning between $50,000 and $99,000, and 51% earning above $100,000 per year. This is to ensure that within the survey panel, there is sufficient ability to pay for financial advice. When preparing for this report, we defined financial advice or wealth management as consisting of three components: investment management, up-front financial planning and ongoing support.

Simon-Kucher & Partners, Strategy & Marketing Consultants:
Simon-Kucher & Partners is a global consulting firm with more than 1,100 professionals in 34 offices worldwide focusing on TopLine Power®. Founded in 1985, the company has more than 30 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.