July 6, 2018
Keeping-Up – The Evolving Concept of WealthContact
By Henriette Stoll, Account Executive, Financial Services
In 1976, ABBA famously sang “All the things I could do, if I had a little money – I wouldn’t have to work at all, I’d fool around and have a ball”, striking a chord with a whole generation. A life of leisure and excessive material possessions formed the concept of what constituted an idealised, ‘happy’ existence for the most part of the 20th century. But does the same notion still hold today?
A Reality Check
On a material level, nowadays in order to be considered ‘wealthy’ an individual has to own over US$1 million in investable assets – the threshold at which a person becomes a High-Net-Worth-Individual (HNWIs), for investment purposes.
However, looking beyond numbers, the truth of the matter is that to be ‘wealthy’ in the 21st century, assets alone no longer suffice. The concept of wealth has evolved from those distant 1970s days, and the term is no longer universally aspirational. The have-nots are increasingly less inclined to admire the fabulously wealthy based on what they own.
Last years’ Uneasy Street, a book by Rachel Sherman on the anxieties of affluence, reveals that well-off people have started to experience what the author considers to be severe guilt because of their wealth – and so have begun to hide it from their friends or lie about the price of their belongings and possessions, claiming the goods to be cheaper than they actually are.
An Evolving Concept
According to a recent study by the US Trust, today’s HNWIs do not cherish the prestige that comes with their wealth, but simply the freedom it gives them to widen their activities. And so, wealth is no longer found in the material possessions people own, but rather in the time they spend doing the things they love or dedicate to the causes they care about.
Additionally, the same study has also found that Millennial HNWIs, a highly coveted target group for wealth managers, do not have a clear purpose about what to do with their money.
A Great Opportunity for Wealth Managers
For many wealth managers this pool of potential clients raises the question of how to reach a generation for whom time, ethical causes and freedom are more important than personal wealth preservation.
For starters, tailored campaigns that distance wealth managers from the ‘traditional’ stuffy image they are often associated with might be a good idea. Coupled with this, a well-researched understanding of how new generations differ in interacting with brands and corporations might be a sure-fire way of winning some serious business.
Like with everything else, however, there is a caveat:
Millennials’ engagement with service providers remains notoriously fickle, and while a Baby Boomer is more likely to stick with their wealth manager through thick and thin, a Millennial is more likely to get up and leave, taking all of their friends and contacts on the way out if they are made to feel unwelcomed or unease.
So, as the concept of wealth evolves with each generation, wealth managers would be wise to adapt to today’s rapidly changing target client landscape. Anticipating shifting trends, resourcing to new digital platforms, and overhauling processes in place to get new clients on board are great starting points.
Going forward, wealth managers need to not only be able to prove that they are able to realise gains for their clients, but they will also need to showcase what those material gains might enable Millennials to experience.