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ANALYSIS

Online platform urged to manage millennial wealth

DUBAI, July 16, 2017

Wealth managers will have to operate like online platform companies offering personalised opportunities if they wish to provide financial advisers with a broad toolkit to help millennials and other clients, said a new report.

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, explained the white paper released by  UBS Wealth Management, a provider of financial advice and solutions to wealthy, institutional and corporate clients worldwide.

This socially connected era will favour 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 per cent 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 per cent said the same about their country's job market. Overall knowledge ranked first, with 61 per cent 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 per cent of respondents said they never expected to retire, compared with less than 23 per cent globally, while 91 per cent 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,” he added.

Millennial opportunities

•    Millennials are likely to be worth up to $24 trillion by 2020, or roughly 1.5 times US GDP1. They start twice as many businesses as baby-boomers and found their first eight years sooner2. In North America alone, baby-boomers will pass down c. $30 trillion to millennials and other heirs in 2011-503.

•    Millennials lead other generations in demanding digital communication and services. 49 per cent of on-demand consumers are millennials vs. 22 per cent who are 55+4; 47 per cent of millennials use social media as part of shopping v 19 per cent of non-millennials1.

•    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 concerns5.

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. – TradeArabia News Service




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