Global digital connectivity is reshaping how millennials approach wealth

Automation and connectivity will further shape millennials’ wealth management tastes and how advisers service clients, according to the white paper on millennial wealth, which was launched by the UBS Wealth Management’s Chief Investment Office.

As technology diffuses, millennials and their advisers look set to lead a wider movement beyond ‘financial supermarkets’ and towards broader, more personalized online wealth platforms. This socially connected era will favor online networks that can help advisers source global opportunities for clients, including generating social as well as financial returns on their capital.

According to a global UBS survey in October 2016, 43 percent of millennials see their technology skills as a positive future influence on their financial security, ranking fourth out of 16 factors. By contrast, only 36 percent said the same about their country’s job market. Overall knowledge ranked first, with 61 percent seeing their level of education as a plus, indicating the high value of digital information to advisers and their millennial clients.

Mark Haefele, Global Chief Investment Officer (CIO) at UBS Wealth Management, said: “In a more socially connected age, wealthy millennials and other private clients have expressed growing interest in innovations like digital platforms and sustainable and impact investing. This gives wealth managers and financial advisers a renewed opportunity to improve their digital capabilities as well as using private capital to help make the world a more sustainable place.”

Simon Smiles, CIO for Ultra High Net Worth at UBS Wealth Management and a WEF Young Global Leader, said: “Our wealthiest millennial clients are at the forefront of the trend towards digital networking and mobilizing investments for public good. To meet related needs, wealth managers and financial advisers must prioritize new digital services like financial networks and help mainstream impact investing and other sustainability-related initiatives.”

Ali Janoudi, Head of Wealth Management Central and Eastern Europe, Middle East and Africa, France and Belgium International at UBS, said: “Our research shows that millennials in the Middle East are hard-working, entrepreneurial, and place a premium on social networking. In our survey of UAE millennials last year, 52 percent of respondents said they never expected to retire, compared with less than 23 percent globally, while 91% had already started their own business or considered themselves likely to in the near future. They also considered building social connections and social networks to be the most important form of wealth. UBS continues to see significant potential for wealth creation among Middle Eastern millennials and will further develop networking as a key aspect of our wealth management offering.”

Millennial opportunities

  • Millennials are likely to be worth up to $24 trillion by 2020, or roughly 1.5 times US GDP. They start twice as many businesses as baby-boomers and found their first eight years sooner. In North America alone, baby-boomers will pass down c. $30 trillion to millennials and other heirs in 2011-50.
  • Millennials lead other generations in demanding digital communication and services. 49 percent of on-demand consumers are millennials vs. 22% who are 55+; 47 percent of millennials use social media as part of shopping versus 19 percent of non-millennials.
  • Finally, global connectivity has brought greater awareness of global problems, boosting millennials’ interest in sustainability issues. Under-35s are roughly twice as likely to withdraw from investments that are experiencing sustainability concerns.

Cross-generational solutions

  • E-commerce provides a model for personalized digital wealth platforms beyond financial ‘supermarkets.’ By offering personalized information and opportunities, and social contacts who share clients’ passions and business interests, multinational platforms can appeal to millennials’ current demands and other clients’ evolving digital tastes.
  • Sustainable investing and impact investing, which aims to generate a measurable social or environmental impact as well as a compelling return, are examples of fast-growing areas that cater to millennial demand for purposeful investments. As other generations increasingly follow millennials’ example, the sector could benefit from more information and dialogue regarding domestic and international opportunities.