A wealthy heir plans to fire his parents’ wealth advisor

This version of the article first appeared on CNBC’s Inside Wealth Newsletter. This is Robert Frank, our weekly guide to Net-Worth Investor and Consumer. Sign up to receive future editions directly in your inbox.

A $100 trillion wealth transfer is set to rebuild the wealth management industry as young investors plan to move their money to new advisors, according to a new report.

A new survey from Capgemini shows 81% of “next-generation billionaires” or a survey aimed at inheriting large wealth from their families, plans to replace parents’ asset management companies. Most cited poor digital products, services and product shortages.

“We staggered when our research returned to that number,” said Kartik Ramakrishnan, CEO of Capgemini’s Financial Services. “What a generation wants is different from what the previous generation is looking for.”

With the historic transfer of wealth ongoing, understanding the next generation of heirs is becoming increasingly important for wealth managers. According to Cerulli Associates, more than $100 trillion is expected to flow from baby boomers and older generations to heirs and spouses. The majority of relocations (over $60 trillion) come from the wealthy and billionaires, making up the top 2% of wealth. And most of the flows are in the US

Companies that can attract, maintain, maintain and respond to the future of wealth will be best positioned for the future. More than two-thirds of asset management executives surveyed by Capgemini said they are focusing on commitment to the next generation.

However, the gap remains wide. A majority (58%) of the executives surveyed admitted that building relationships with the next generation was “challenging.” Beyond age differences, new species of inheritance (born between 1965 and 2012) differ dramatically from Boomer in terms of investment, priorities and lifestyle.

Below are five of the next generation’s top priorities and how wealth managers will best adapt.

Young investors are traditionally taking more risks, taking their timeline and age. However, age-adjusted millennials and generals prefer to live further on the risk curve using meme stocks, stock options, cryptocurrencies, and other more speculative asset classes.

According to a survey by Capgemini, the main goal of wealthy boomers is to preserve wealth, but the next generation is looking for positive growth. The flood of online investment videos and explainers has boosted confidence in taking risks to young investors.

“This is a combination of both age, risk trends and awareness,” Ramakrishnan said. “It’s the ability to know more, learn more, and get better knowledge about how they can invest.”

Older investors are leaning towards stocks and bonds, while younger investors want more crypto, private equity and foreign investments. 88% of investors say the next generation is more interested in private equity than the baby boomer generation.

Capgemini believes that young investors will no longer be driven solely by stocks and bonds, and that private equity and other alternatives can provide better long-term growth. Private equity is also becoming more widely available through lower minimums and third-party asset managers.

Young investors want more crypto, but two-thirds of wealth managers surveyed by Capgemini say they don’t have an emerging asset class investment option, including Crypto.

Young investors are also more likely to venture abroad in their portfolios. Research shows that millennials and the majority of Zers want to “enhance offshore investment.” Of particular interest are new wealth hubs around the world, including Singapore, the United Arab Emirates and Saudi Arabia.

The next generation is “more global,” Ramakrishnan said. “They traveled more. They understand the global dynamics. It gives them some of the returns they are interested in and see in these markets.”

Young investors are digital natives, but asset management companies are slow to adapt. While 78% of baby boomers prefer face-to-face meetings over video calls, millennials want a mobile app that allows them to access and trade portfolios.

“This isn’t “sitting with you once a year and explaining how your portfolio is doing,” but walking through your portfolio once a quarter and once,” Ramakrishnan said. “This is an active engagement channel and there’s information that should be obtained from consumable nuggets.”

Two-thirds of millennials say they expect advanced digital products from wealth managers. He complains about the lack of services available on his preferred digital channels, almost half of them complained.

Aside from the useful content of “nuggets” in “nuggets”, the next generation of investors are providing real-time access to all financial information, according to the report. According to Capgemini, they also want “an intuitive tool for decision-making and secure transaction capabilities.”

Over two-thirds of the baby boomer generation hope that the next generation of heirs will receive financial education to take responsibility for managing their inheritance. However, many of the asset management companies’ education programs have not proven effective. Some say the program may become too dry, talk to young investors, or become outdated.

“It’s not just that we’re going to give these huge reports that we’re talking about the impact of interest rates and what’s going on in the market,” Ramakrishnan said. “It’s difficult for people to consume. It’s simplistic, it has to be something that people can pick up and practical.”

Josh Brown, CEO of Ritholtz Wealth Management, who has built a huge following among the Genzers with podcasts, blogs and social media, said that younger clients want more authentic and personal communication.

“The new generation grew up chasing people rather than businesses,” Brown said. We realized a few years ago that it would first make someone a fan and those fans would become your potential client. ”

In addition to customized investment strategies, young investors are looking for a wider range of services related to wealth. According to Capgemini, real estate and tax planning is important along with charity advice. We also expand our list of concierge services, from luxury travel and custom-made experiences to advice and insights on luxury purchases such as fashion, beauty, jewelry, wine, spirits and more.

Despite their youth, the next generation is looking for quality medical and health advice along with educational recommendations (i.e. admissions). Goldman SachsFor example, London-based concierges and partners provide medical concierge support, home consultations with physicians, and educational consultations.

Cybersecurity advice is also a fast-growing service for asset management companies.

“The ability to get something that may be exclusive, otherwise we may not have gained,” Ramakrishnan said. “The next generation is more experience-driven than product-driven. So it’s not just about buying luxury products. It’s a luxurious experience, a tailored experience. These are the types of partnerships that an asset management company can offer, which increases and increases loyalty among its customers.”