March 22, 2021

Every year, Wealth Dynamix CEO Gary Linieres asks the leadership team to reflect on the 12 months and share their number one top piece of advice for wealth managers looking to gain an edge in the year ahead through their service offering. The post below is the response from Lucy Heavens, Marketing Director.

Wealth managers must master hyper-personalisation in order to retain revenues during the great wealth transfer.

For wealth managers striving to achieve competitive advantage, the depth of client relationships heavily influences service quality, loyalty, share of wallet and – ultimately – profitability.

Increasingly, wealth managers are reassessing what they must do to continue delivering value for clients and strengthen client relationships. With pressure mounting to grow and retain AUM amid the long-awaited ‘great wealth transfer’ (the transfer of more than $30 trillion in wealth from baby boomers to younger generations over the next two decades), attention is now focused on understanding how millennial and Gen-X individuals prefer to manage their financial affairs, and the financial management skills they are likely to have.

Fee-sensitive next generation clients favour high-tech, high-touch personalised services. Personalisation substantially increases engagement and loyalty, and in a recent survey more than a third of clients said they’d like Amazon-like automatic recommendations. Fees are a sticking point for nextgen clients, as reported in Capgemini’s 2020 World Wealth Report, with 33% of HNWIs saying they are “uncomfortable” with fees, and 22% planning to switch wealth managers within the coming year, stating high fees as the primary reason for the swap.

Historically, traditional wealth managers have differentiated their offerings and justified higher fees by stressing the value of personalised service and face-to-face interactions – which come at a price. But operating models must adapt for them to remain competitive, given shifting client requirements and downward pressure on fees.

In recent years online-only wealth management service providers seem to have mastered personalisation, digitally and at palatable cost, with little or no human intervention. Their platforms have attracted younger mass affluent generations, whose AUM is not currently in the sweet spot for traditional wealth managers. However, this will change over time, as wealth is transferred from one generation to the next.

Personalised service vs. fees – must nextgen clients be forced to choose?

Increasingly, nextgen clients are looking for the best of both worlds, not least because their financial literacy is significantly lower than that of their predecessors. TIAA Institute research found that only 11% of millennials displayed a “relatively high” level of financial literacy, while 28% conveyed “very low” literacy. Gen-Xers didn’t fare much better, with industry estimates indicating that large swathes of this generation are struggling to balance spending and saving habits. So the need for professional advice is on the rise, and if wealth managers can strike the right balance between personalised service and cost, their competitive advantage will soar.

“The need for professional advice is on the rise, and if wealth managers can strike the right balance between personalised service and cost, their competitive advantage will soar.

In 2021 wealth managers must change their approach to personalisation in response to shifting client expectations, increased competition from online service providers and pressure to sustain service quality, while needing to support remote working and reduce cost-to-income ratios.

In 2021, hyper-personalisation will prevail

Hyper-personalisation is the use of data to provide more personalised and targeted products, services and content. The volume of client data captured throughout the client lifecycle has never been greater. Although this rich source of intelligence could be used for hyper-personalisation, the majority of advisors still lack the tools required to analyse and interpret masses of data quickly and cost-effectively, to deliver next best recommendations and advice.

In 2021, wealth managers will turn to technology to leverage data and take the manual legwork out of interpreting clients’ needs, preferences, sentiment and intentions. This is the only way they can deliver highly personalised client service, cost-effectively and at scale. Instead of being restricted to segmentation based only on age, gender and AUM, automated hyper-personalisation equips advisors with the intelligence to create bespoke risk profiles, generate more timely and meaningful client reports and produce personalised portfolios, incorporating customised advice.

Naturally, the more personalised client service is, the deeper client relationships become. And the deeper client relationships become, the more wealth managers will be able to compete in a world that is now characterised by changing client demographics and uncertain outlook.

This post is an extract from the e-book ‘5 ways wealth managers can get ahead in 2021’. Download the full e-book below.


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20+ years experience in FinTech, planning and executing successful marketing strategies.


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