The death of the wealth manager

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Traditional wealth managers are under threat of becoming irrelevant!

Right now, individual investors account for 50% of global wealth and are projected to triple their investments in alternative assets, from $4 trillion to $13 trillion, over the next decade. This means a significant shift in how this money is managed.

At the same time, this wealth is also changing hands and moving downhill to younger generations. According to Cerulli, the Great Wealth Transfer is the forecasted hand-off of trillions of dollars from the older Silent Generation and Baby Boomers to their young Generation-X, Millennial, and Generation-Z adult children and grandchildren over the next 20 years or so. Millennials alone are expected to inherit $27.4 trillion, while Gen Z stands to inherit $11.5 trillion. That said,c according to Fidelity, wealth managers and advisors have reached out to only 13% of their clients’ adult-age children. A surprisingly small number, since, according to the same research, more than 70% of heirs are likely to fire or change advisors after inheriting wealth from their parents. 

And if Millennials and GenZ clients are likely to fire the very wealth managers their parents used, what luck will a similar wealth management firm have in winning that business when they all look the same and offer the same thing?!

The world of wealth management, which high-net-worth individuals have long dominated, is facing a difficult future.

For decades, traditional wealth managers have operated within exclusive networks, requiring high minimum investments and maintaining strict accreditation rules that effectively shut out the average retail investor. For younger generations like Millennials and Gen Z, this model is outdated, elitist, and increasingly irrelevant. As younger investors grow in influence and wealth, wealth managers risk being left behind unless they adapt. And creating a TikTok account isn’t going to cut it!

The needs and expectations of younger generations don’t align with the wealth management industry. Current infrastructure largely caters to very wealthy individuals, leaving most retail investors vastly underserved. Not to mention the stuffy, outdated mentality and general vibe of the industry. If wealth managers think that they’ll win over these investors once their wealth meets the minimum threshold, they’re in for a painful surprise. 

Barriers That Are Pushing Younger Investors Away

There are significant barriers that make traditional asset management unappealing to Millennials and Gen Z. Investor accreditation rules, high fees, and minimum investment thresholds are all factors that shut out most younger investors. Not to mention the "old-boys-club" culture where wealth is managed through exclusive, opaque relationships, which is in sharp contrast to the values of transparency and accessibility that younger generations demand.

Millennial and GenZ investors aren’t only looking for access to better investment options but also experiences that feel authentic and aligned with their lifestyles. Traditional wealth managers, who often project an air of exclusivity and conservatism, will likely struggle to build trust with this demographic. And the disconnect is not just in terms of service but also communication. Millennials and Gen Z learn about finances digitally. YouTube, Instagram, TikTok etc. are all key channels but most traditional asset managers are absent or ineffective on these platforms. And it's not just literal communication but subconscious communication too. The general message they’re projecting isn’t one that's appreciated by the demographic they hope to serve.

The Digital Expectation Gap

A major factor in this growing divide is the digital gap. Younger generations have grown up with digital-first experiences where they can manage everything from banking to shopping with a few taps on their smartphones. They expect the same from their financial services. According to research from FNZ, 74% of Gen Y and Z expect their investment platforms to offer digital experiences that rival those provided by tech giants, while over 50% want chatbots and automated tools to help them manage their portfolios. 

Despite this demand for high-quality digital products, most asset managers lag behind, opting for in-person client meetings and clunky archaic legacy systems. A far cry from the streamlined, personalised services younger investors now expect. And it's this failure to modernise that will result in a significant loss of market share as younger investors stick to the digital solutions they’ve come to expect.

A Trust Deficit

Another critical issue is the trust deficit between asset managers and younger generations. Millennials and Gen Z are deeply sceptical of financial institutions that don't operate with transparency and authenticity. In fact, they’re deeply sceptical of the financial services industry in general. The 2008 financial crisis, the rise of meme stocks, crypto scams, and numerous high-profile scandals within the financial world have all fueled this distrust. These investors are more likely to turn to platforms that offer them a sense of control and clear, transparent fee structures. But more importantly, platforms and brands that feel relatable.

Traditional asset managers on the other hand often maintain opaque fee models and rely on human advisors to build trust. These advisors often being older white guys in suits who have very little in common with a younger generation of investors. While human advisors will continue to play a vital role in wealth management, research suggests that younger investors are more willing to trust AI-enabled services for portfolio management, investment advice, and risk assessments. In fact, 87% of Gen Y and Z are open to using AI for researching investment opportunities. For these investors, AI is seen not just as a tool for efficiency but as a source of unbiased and data-driven insights.

The wealth management industry is at a critical tipping point. Traditional asset managers face a stark choice: adapt to the digital-first, transparency-focused world of Millennials and Gen Z, or risk becoming irrelevant. As younger generations gain financial power and influence, they will increasingly seek out platforms and advisors that align with their values, embrace technology, and offer a more inclusive and authentic investment experience. And truthfully, we’re not even sure that will save them!

What we’ve been working on at Shuttle

• Onto the final stages of our platform redesign 🎨

• Attending SaaStock to meet and chat with fundraising founders 🤝

• Heavily focused on our launch and finalising our first investments for our community 🚀

The Unsophisticated Investor is brought to you by Scott & Rob, the founders of Shuttle. We’re both sick of private markets being a playground exclusive to the ultra-wealthy so we started a company to challenge the status-quo. Shuttle’s singular focus is to unlock private markets for Millennial and Gen Z retail investors and help them build wealth through the highest performing private market opportunities.

Scott & Rob
Shuttle Co-Founders