The needs of «new» customers go far beyond ecological aspects, Carina Schaurte writes in an essay for finews.first.
This article is published on finews.first, a forum for authors specialized in economic and financial topics.
When people currently talk about sustainability or ESG, they usually mean the «E», i.e. the environmental aspect. The EU Action Plan, which aims to strengthen sustainability in the financial markets, also has a clear focus in this area. This is often explained by the demands of the «new» generation of investors: millennials and women, who already hold one-third of the world's assets, and the trend is rising sharply.
But the needs of these «new» customers go beyond ecological aspects. Having grown up in an environment of prosperity and without the personal experience of fundamental shortages, their focus is shifting from purely providing for old age to greater flexibility in individual phases of life and the desire to invest according to personal convictions and in line with their own experiences and lifestyle.
«A successful businesswoman without a family may not need complex investment solutions»
Financial advisors need to rethink their approach if they are to meet these changing customer needs. Current developments in the financial markets, as well as investors' experiences from the financial crisis, are also likely to contribute to customers' desire to move away from complex product solutions and towards comprehensive (financial) advice. Thus, to add value for the customer, it is necessary to understand the underlying needs, which do not necessarily correlate with the size of the available assets.
For example, a successful businesswoman without a family may not need complex investment solutions across generations and countries, but, based on her personal experience only wants to invest in companies with a positive corporate culture.
«This also requires a new understanding of the role of the client advisor»
An internationally active «young professional» on the other hand, needs cross-country access and solutions in terms of tax, retirement and financial planning, while perhaps wanting to improve his environmental footprint.
This also requires a new understanding of the role of the client advisor. Contrary to the repeated assertion that client advisors are a concept from the last century, last year's LGT market study showed that they are increasingly in demand – but also confirmed that the requirements placed on them are changing. The increasing complexity of clients' life and financial situations, as well as the above-mentioned core values, should be at the heart of the customer-advisor relationship. The future added value of a personal financial advisor is not due to the selection of individual investment options but as a «financial project manager» for the customer.
«The digital way of working has become the «new normal»
To ensure this paradigm shift, digital support for the advisor is critical. If they have to spend more than 50 percent of their time on administrative tasks due to the complexity of regulatory and financial market requirements, a real change in job profile is hardly possible. Allowing the new «financial project manager» to focus on and support value-creating activities for the customer, therefore, requires more digitization than purely process-based digitization of workflows.
In addition, it is also essential that the personal understanding of the role of the client-advisor – to be an investment advisor with a focus on personal relationships – changes. The forced digital transformation in personal interactions during the last year has paved the way for further solutions. In this process, the digital way of working has become the «new normal».
«Such a transformation cannot be driven by regulation»
It is now up to financial services providers to leverage this momentum to reposition the client-advisor as a comprehensive «financial project manager» focused on the underlying values of the customer. In addition to further advancing digitization toward «intelligent solutions,» this requires above all adjustments to the culture and, along with it, the role and self-understanding of the client advisor.
Such a transformation cannot be driven by regulation, but just as MiFID II has led to a digitization push, the EU Action Plan has the potential to do the same for customer-centricity.
As an independent advisor and expert, Carina Schaurte supports asset and wealth managers both in strategic issues and in their efficient implementation. She builds on more than 15 years of experience in strategy consulting and the financial industry. The topics of sustainability and impact are particularly close to her heart. Therefore, in addition to her business administration studies at the University of St. Gallen (HSG), she also completed a Master in Leadership in Financial Development.
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