Wealth management is not just about investment, but also tax management and defining the best plan for how you actually receive your income in the first place. For instance, working out what is the optimum percentage of any bonus or raise to have as capital and how much to take in good old cash.
The truth is, a few changes at an early stage can make a massive impact down the line—and modern investors know it. They are becoming more switched on to the possibilities, and this is creating a new type of customer for wealth management companies—the re-wired investor.
What is a re-wired investor?
A re-wired investor will only share a few traits with a traditional or ‘typical’ investor. They will be predominantly from generations X and Y (with a small portion of Boomers who are heavily influenced by a younger partner). Financial advisors will have to deal with the reluctance of these generations to be involved with anything they perceive as a ‘hard sell’ or any type of face-to-face sales at all.
With a number of high-value individuals and many smaller investors who want to invest much earlier in their lives than previous generations falling into this category, the very best wealth management companies need to be aware of their habits. Here are five important points to keep in mind when dealing with re-wired investors.
1. Don’t forget they are individuals, or you’ll lose them
Re-wired investors are fully aware of what they want to achieve. They are not so influenced by an advisor and tend not to be shepherded towards a standard plan. They want advice that is specific to them and are likely to insist on it.
2. They prepare for meetings and seek advice from multiple sources
These investors are skeptical and will seek further verification regarding anything they are told by an advisor, and will spend time both before and after meetings doing their own research and compiling questions they will expect to have answered.
3. They expect to get answers 24/7
Because they can interact with everything else at any time, due to extensive use of multi-channel customer service, they carry this expectation into their financial advice. If they are working on their own research in the evening and have a question, they expect to be able to fire it off then and there, and expect an immediate answer.
4. Tread carefully—they do not necessarily see risk as an opportunity
Re-wired investors are more risk-averse than previous generations and are more likely to play it safe, especially those investing early in life. They do expect a bespoke plan for their investments to include a balanced number of options, but are likely to value safety over high returns.
5. They are more likely to ‘go boutique’—and so should you
Re-wired investors and their particular needs have led to the emergence and growth of boutique wealth management services. These tend to offer a made-to-measure service specific to individuals rather than the off-the-peg services offered by traditional companies.