The wealth management industry continues to face many challenges as it recovers from the financial crises of the past few years. And while financial markets have recovered most of their losses since 2008, investor confidence has not yet returned and volatility remains high.

Against this backdrop, investors now have access to a wide variety of investment information online, including analyst research, detailed company and sector financial reports, and data visualization tools previously available only to financial advisers. The combination of poor market performance, availability of information, and low-cost business models that put the investor in control are calling into question the fundamental value proposition of wealth management firms and their financial advisers.

To better understand the mind-set of wealthy investors, we conducted our first wealth management survey in January 2011. An important finding was uncovering a relatively young wealthy investor group we called “Wealthy Under-50s.”

As we shared the findings with our customers, new questions arose including:

  •  Is there a desire for technology-enabled interactions among younger wealthy investors?
  • Given that many clients value face-to-face meetings with their advisers, how often would they use a high-quality video option?
  • Is there a “right way” to deploy technology-enabled services and capabilities?
  • Would video services convince wealthy investors with no adviser to hire one?
  • What are the main barriers to the adoption of technology-enabled services?

To answer these questions and provide additional insights about wealthy investors, we conducted our second survey 18 months later, in April 2012.  The findings show rapidly shifting attitudes about wealth management and technology-enabled services. Specifically, we found:

  • After only 18 months, the behaviors and attitudes of the Under-50s in the first survey now extend up to age 55 (“Wealthy Under-55s”).
  • Although Wealthy Under-55s meet more often with their financial advisers, they are less satisfied with those interactions than older investors.
  • Wealthy Under-55s want more personalized investment recommendations, access to more diverse opinions and expertise, and more frequent access to their financial advisers than they currently receive.
  • Wealthy Under-55s believe that technology-enabled services that feature video-enabled access to financial advisers would provide them with better advice and more satisfying interactions than they receive right now.
  • Wealthy Under-55s are much more willing to change advisers.  Twenty-percent of them indicated they were likely to change their primary adviser in the next year, compared to only 4 percent of investors over the age of 55.

And perhaps most important for financial services firms looking to capture a share of this market, Wealthy Under-55s are willing to move at least some of their assets to firms that provide these services (57 percent in the United States, 54 percent in Germany, and 51 percent in the United Kingdom).

We also found that 27 percent of wealthy U.S. investors do not have a financial adviser to help them manage their money, a finding consistent with that of last year’s study (30 percent). In the United Kingdom, a staggering 52 percent of wealthy investors manage their own finances, while 40 of wealthy investors do so in Germany. Globally, however, 63 percent of wealthy investors who do not have a financial adviser are willing to work with one. We refer to this group as “Wealthy Gettables.” Financial services firms can attract Wealthy Gettables with technology-enabled business models that deliver quality financial advice at a lower cost than traditional adviser-led services.

Based on the survey results, Cisco IBSG estimates that for a firm with $200 billion in assets under management and approximately $1.8 billion in revenue, the overall opportunity could be as much as $341 million. This benefit comes from:

  • Attracting investors with a financial adviser (especially Wealthy Under-55s). For the industry as a whole in North America, as much as $31 billion of revenue could therefore be “in play” from the Under-55s.
  • Attracting the Wealthy Gettables. Their responses indicate that firms could grow 6 percent by offering this new model.
  • Reducing client attrition by forging stronger connections between the investor and the firm, not just the adviser. There are opportunities to reduce this attrition through use of video and collaboration tools, which could save 1 percent to 2 percent of a firm’s revenue.

To learn more about our research and how it can help you prepare your business for Wealthy Under-55 and Gettable investors, please download Reinventing Wealth Management with Technology-Enabled Video Services or listen to our slidecast.


Robert Waitman

Director, Privacy Center of Excellence