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Connecting with Gen D: Attracting, engaging, and retaining the next generation of investors
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Page 1: Connecting with Gen D · 06.07.2015  · Page 6| Generation D—How to attract, engage and retain the next generation of investors Many Gen D investors participate in self-directed

Connecting with Gen D: Attracting, engaging, and retaining the next generation of investors

Page 2: Connecting with Gen D · 06.07.2015  · Page 6| Generation D—How to attract, engage and retain the next generation of investors Many Gen D investors participate in self-directed

In a recent survey of over 1000 current and futureinvestors, Accenture identified a significant segment unlike any traditional demographic,and termed it Generation D (Gen D). These investors are notdifferentiated by their age butrather by their broad adoptionof technology, especially theirdeeply ingrained use of digitaland social channels in almostevery aspect of their lives. WhileGen D investors are skepticaltoward financial advisors (FAs),wealth and asset managers can secure their foothold with thisgroup by integrating digitalcommunications into theirrelationships.

Page 3: Connecting with Gen D · 06.07.2015  · Page 6| Generation D—How to attract, engage and retain the next generation of investors Many Gen D investors participate in self-directed

Actively seek financial advice

B

59%From any source

40%From financial advisor

O

Overestimate investor knowledge“My client is extremely knowledgeable about investing”

12%

42%

Gap Actual

FA Assumption

Actual

FA Assumption

Actual

FA Assumption

Investor

Advisor

Investor

Advisor

Misinterpret client’s investment styleAggressive investors

13%

28%

Gap

Moderate investors

51%

34% Gap

Misjudge strength of relationships“We have a personal relationship”

38%

63%

Gap

“Takes time to know me”

67%

42% Gap

Manage financial transactions and conduct research online using multiple devicesComputer users

94%

Smartphone users

78%

Tablet users

39%

Page 3

Connecting with Gen D:

Attracting, engaging, and retainingthe next generation of investors

Chart 1. Bypassing Advisors

Chart 2. Advisor Perception vs. Investor Reality

Chart 3. Investors Always Connected

The Accenture study revealed that 59% of these potential clients soughtfinancial advice, but only 40% soughtadvice from their financial advisor (see Chart 1). Other sources of adviceincluded investment websites, onlinevideos and webinars.

The study also revealed that when Gen Dinvestors do consult their FAs, a surprisingdisconnect exists (see Chart 2). Advisorstend to overestimate the investor’sknowledge, misunderstand investmentstyle (advisors believe Gen D investorsare more aggressive and less risk aversethan they really are), and overestimatethe strength of their advisor-clientrelationship.

Gen D investors are “always on” consumerswho have a high level of education,wealth, and positive attitudes towardtechnology in their lives. Based on insightsprovided by these investors and theiradvisors, Accenture has identified fourkey areas of focus for firms to employthat are vital to attracting, engaging,and retaining these investors:

• Customer Analytics

• Self-Directed Tools

• Community Connections

• Gamification

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Page 4 | Generation D—How to attract, engage and retain the next generation of investors

Gen D investors’ needs andexpectations are changing as theybecome more accustomed to aricher, more diverse, multi-channelexperience for financial transactionsand communications. They expecttheir FAs to be responsive andproactive. Wealth and assetmanagement firms armed withreal-time and predictive analyticscan better address these investors’needs and expectations, especiallywithin the digital environment.Analytics can help firms andultimately advisors gain a deeperunderstanding of their clients’portfolio and help proactivelyidentify “next best action" basedon their clients’ potential needsand key future life events.

The four key areas pivotal to connecting with Gen D

1. Customer Analytics

Through robust opportunity-basedanalytics, firms can leverage existingclient intelligence to better targetproducts to specific clients throughenhanced data-driven segmentationtherefore increasing existing client walletshare. Analytics can also provide accounttransaction information, as well as adeeper understanding of a customer’s risk profile, campaigns and channelinvolvement, even the client’sinteractions and behavior information.

Additionally, by viewing assets andliabilities of current and future Gen Dinvestors—compiled from internal datasources, credit bureaus, external vendorsand US census—a “Decision Tree” approachcan help identify a client’s propensity tobuy. On a smaller scale, a product, adistribution channel, and an offer can be created that is tailored to each Gen Dinvestor’s unique needs. Firms can prioritizethis segment in the marketplace, thenmodel how to speak to them.

Regardless of a firm’s starting position onthe analytics journey, a “Pilot and Assess”

approach may make sense. Pilot andAssess includes assessing relevant databased on strategic alignment, completinga Proof of Concept, and prioritizingfindings to develop a value drivenbusiness case, which can help assessmodel development needs against anorganization’s strategic priorities, andthen identify gaps.

While many firms are reluctant to embraceanalytics-based segmentation—it seemsdaunting to implement—the Pilot andAssess approach suggests starting simpleand small. Some firms are taking thissmaller-scale approach to prove thevalue of analytics to drive real timeinsights and offerings before moving onto larger-scale initiatives.

Wealth and asset management firms canleverage analytic tools to understandclient needs, behaviors, and preferences.Firms have a unique opportunity toembrace and leverage the holistic viewdata offers, provide these tools to theirFAs, and drive profitability to the digitalfront line.

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Field studies

Customer Analytics in Action

For a wealth-based Italian bank thatwas experiencing a high rate ofaccount closings, Accenture helped to structurally improve its capabilityto “accelerate attrition attack” and reduce the closure of currentaccounts. Accenture developedactionable segmentation and “lostclient” behavior analytics. We builtrules and churn predictive models for each segment. A pilot test within39 network branches resulted in: an82% contact rate for wealth andsmall business clients; a 330% dropin churn rate among high risk clients;and a 270% drop in churn rateamong medium risk clients.

For a large US private bank, Accenturedeveloped client-centric marketingprograms for high net worth clients to increase “share of wallet.” Relevant,precise cross-selling led to a 25%growth in assets within two years. Inaddition, service channel realignmentreduced cost to serve by 15%. Thisenabled the bank to win back 30% oflost assets and increase its “share ofwallet” by 5%.

The Pilot and Assess phase is the first step of a multi-phase analytics journey intended tobring the firm closer to its advisors, clients, and target profitability

Chart 4. Pilot and Assess

Identify StrategicAlignment Proof of Concept Develop the

Value Proposition

• Assess model development needs against key strategicpriorities and discovered gaps

• Execute Proof of Concept based on identified gaps

• Identify quick wins

• Develop the analytics roadmap and value proposition

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Page 6 | Generation D—How to attract, engage and retain the next generation of investors

Many Gen D investors participatein self-directed investing. Of theinvestors surveyed, 65% viewthemselves as entirely self-directedor partially assisted, while only 35%stated they use an FA exclusively.With the growth of the Gen Dmarket, the self-directed marketwill also grow. Investment firmsthat embrace this shift and offereffective, interactive tools forinvesting will be at the forefront of cultivating and maintainingrelationships with Gen D investors,as well as building the firm’s brandand ultimately increasing theirmarket share.

2. Self-Directed Tools

Gen D investors expect their firms toprovide online investment and educationtools. Firms can provide these investors withan online toolkit—financial planning,portfolio insights, performance reporting,educational learning tools, webinars,access to research, thought pickers/screeners, even “fantasy investing” (alsosee “gamification” on page 10)—toengage with clients in their preferredenvironment. This involvement enhancesthe firm’s brand and connects it to theinvestor in a distinctive way that candifferentiate it from the competition.

Gen D investors expect real-time service,and financial firms can win their loyaltybased on how they handle self-directedinteractions. The key is to provide optionsfor the investor to interact and conveniently

E-Trade and Fidelity—the leaders of Forrester’s Mobile Wealth ManagementBenchmark—and TD Ameritrade all enable clients to view their portfolioallocations against a target allocation and take action to rebalance. Fidelity’snew Guided Portfolio Summary goes the furthest, pulling in account informationfrom other financial institutions to show the client’s total asset allocationand investing style across all the firms the investor uses.1

TD Ameritrade rolled out mega-drop-down menus that expose the site’sinformation structure early, enabling users to scan the contents of mainmenu categories to see where they’re likely to be able to complete theirgoals, and then get deep into the site quickly.2

Field studies

Effective Self-Directed Tools

link with their firm, such as contactingtheir FA through web chat, messaging,and other online channels, on their terms.

As self-directed technology proliferates,firms leading this charge are alsorebranding their products, refreshing theirhardware, and adding infrastructure toenhance performance. With anytime,anywhere internet accessibility, self-directed Gen D investors are driving anentirely new type of investment mindsetand behavior. This segment offers a greatopportunity to the firms who providedynamic, engaging, and relevant tools,and to the FAs who embrace these tools.

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Page 8 | Generation D—How to attract, engage and retain the next generation of investors

3. Community Connections

Gen D investors will interact witha firm’s brand in ways the firmcannot control. This happens onsocial networks, the firm’s website,its competitors’ websites, and inblogs. Investors can share their firmand advisor experiences throughsocial media by contributing toexisting communities or creating a new community in which clientscan interact.

Successful firms continually reevaluatetheir social media strategy to ensure they are intentional about how they areoptimizing brand experiences within theproperties they own and those they don’t.

It is important for investment firms tolink with existing social channels whendeveloping these communities. These Gen D “digital natives” are increasinglyusing blogs, forums, ratings and reviews,branded networks, and location-basedservices to engage with their communities.While they share investment knowledgeand opinions, they also become moreeducated about investment opportunitiesand products. Firms have the opportunityto create a culture and provide theresources to interact directly with thisGen D segment. FAs can become anactive part and, potentially, a facilitatorin these communities.

An important aspect for firms toremember is the need to be cognizant

of the guidelines and compliance rules of engagement while navigating socialmedia. In order to ensure compliance,many firms are adopting FINRAregulations, supervisory policies andprocedures for FAs who participate insocial media sites for business purpose.For example, FINRA considers Internetand social media sites the same aswritten and in-person communication.Publicly available websites can beconsidered advertisements. Use of email,instant messaging, and password-protected websites can be deemed assales literature or correspondence. Chat room discussions are consideredpublic appearances.3

Firms that can implement a strategy,provide guidance and a plan on how toleverage the new media for their FAs sothey can actively engage with Gen Dinvestors in this environment, will have a powerful way to engage this market.

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Field studies

Engaging SocialCommunities

Page 9

Social media is any interaction where people are empowered to talkto each other through digital channels.

Chart 5. Highly Engaged in Social Media

Top four platforms used by Gen D investors surveyed

Facebook

91%

31% 31% 31%

Twitter Google+ LinkedIn

Accenture developed a conceptualdesign and pilot project to address a large, global wealth manager’soverall social media monitoringstrategy. The pilot project iterativelyimproved predefined services andoutput configurations to meet thisfirm’s unique requirements of andintegrated them into its businessprocesses and organization.

Subsequently, Accenture designed a multilayer operating model thatdefined processes, structure andtechnology components, and humanresources needed to run the program.All together this was brought to lifeas a fully functional social media-monitoring capability and deployedinto market where the firm nowperforms the tracking on its own.

Morgan Stanley was the first top-fiveUS brokerage firm to allow financialadvisors to use LinkedIn and Twitter.These advisors and agents can postupdates from libraries of preapprovedcontent to seed their social mediainteractions. TIAA-CREF uses socialnetworks to demonstrate thoughtleadership on the markets and onfinancial topics of immediate interestto consumers and B2B clients. Bankof America, along with several otherinstitutions, uses Twitter for customerservice and customer outreach.Multiple tweets per day keep the firmtop of mind.4

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Page 10 | Generation D—How to attract, engage and retain the next generation of investors

4. Gamification

Gamification—creating simulation“games” to engage the Gen Dinvestor—takes the essence ofwhat makes games so compelling(and sticky) and applies it to non-game contexts. Gamificationprovides investment firms theability to offer a more interactiveand differentiated customerexperience. This is achieved byincorporating a game-like rangeof features such as challenges,contests, and rewards intoinvestment activities andsimulations.

Creative “fantasy investment” tools are a great opportunity to demonstrate thefull range of services the firm providesand, in the process, connect the userwith their brand. Based on the analyticsleveraged to learn more about potentialinvestors, a simulation trial can beoffered to clients or prospects who meetcertain investing criteria. Gen D investorscan open trial simulation accounts totest the experience of interacting withthe firm. Because self-directed tools aredesigned to create engagement andparticipation—part of the mix to theoverall growth strategy—Gen D clientscan receive messages prompting them toinvest risk-free. Investors can measurethese “fantasy investment” returns andsee how they would have performed in

the market without risking any real money.Fantasy investing is a great way to initiatea relationship with Gen D investors earlyin their investment lifecycle, when theyhave fewer funds but high investing orinvestment potential.

In addition to being an engaging way toconnect with customers, gamificationcan provide firms with valuable investorinsights. By creating an environmentwhere investors can fantasy-buy, firmscan gather insights and test productsand services. Firms can benefit greatlyfrom this enhanced repository ofinvestor data gathered via gamification,data provided willingly and on anongoing basis by the Gen D investor.

Citi launched a social media credit card with a variety of game mechanicsemployed. Users earn points for rewards and compete for the top spot on the social leaderboard via a Facebook app. They can also check in differentlocations for deals and share deals with friends via the app for more points.5

A good example of gamification outside financial services is Nike+. Nike+measures and records the distance and pace of a walk or run, and thatinformation is transmitted to the user’s iPod, where it is synced online andshared with the Nike+ community through social media. iPod softwarerewards users if they reach a milestone with congratulatory messages fromcelebrity athletes. In 2011, membership in Nike+ grew 40%, which helpedboost revenues in the running category by 30%.6

In another example of non-financial services gamification, Marriott wantedto expand in less established growth markets and needed a way to engageand excite Gen Y users to fill tens of thousands of open positions. Thecompany launched the “My Marriot Hotel” Facebook game, where playersoperated their own Marriot hotels. In 2011, the game educated over 12,000potential hires on different career paths in hospitality, while creatingsignificant brand awareness for Marriot.

Field studies

SuccessfulGamification

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Engaging the Gen D Investor Wealth and asset managers now havethe ability to identify and activelymarket to this unique Gen D group—75 million active investors with $27trillion in assets—and engage them in their preferred environment, betterarmed with insights specific to theirneeds and propensity to buy. Whetherit is by employing analytics basedsegmentation, offering self-directedtools, creating compelling socialchannels, or offering no-riskgamification, firms can better position

themselves to be relevant to thedigitally sophisticated next generationof investors. Firms that provide theresources and touch point opportunitiesfor their FAs to intereact effectivelywith Gen D investors will have a great opportunity to earn and keeptheir business.

In this digital age, financial advisorsmust be accessible to clients on theirterms, including the channels andinteractions through which clients aremost comfortable engaging. Gen D

investors also expect their advisors to take the time to understand theirindividual needs and offer theminsightful advice on how to achievetheir financial goals. If firms providefinancial advisors the training andtools to engage this large and viableGen D market where and when theyprefer, both will benefit. If they don’t,Gen D investors will find someonewho will.

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About AccentureAccenture is a global managementconsulting, technology services andoutsourcing company, with morethan 246,000 people serving clientsin more than 120 countries.Combining unparalleled experience,comprehensive capabilities across allindustries and business functions,and extensive research on the world’smost successful companies,Accenture collaborates with clients tohelp them become high-performancebusinesses and governments. Thecompany generated net revenues ofUS$25.5 billion for the fiscal yearended Aug. 31, 2011. Its home pageis www.accenture.com.

Copyright ©2014 AccentureAll rights reserved.

Accenture, its logo, and HighPerformance Delivered aretrademarks of Accenture.

Notes1 Forrester Research—“Trends 2013: DigitalWealth Management,” by Bill Doyle,September 24, 2013

2 Ibid

3 FINRA website—FINRA.org

4 Forrester Research—“Trends 2013: DigitalWealth Management,” by Bill Doyle,September 24, 2013

5 Tech In Asia, “The Social Credit Card, Will You Get One?” March 9, 2012. Retrieved September 10, 2012 fromhttp://www.techinasia.com/clear-platinum-card-citibank/

6 Nike, “2011 Letter to Shareholders,” July 13, 2011

ContactsAlex Pigliucci is the Global Lead for Wealth and Asset Management [email protected]

George Korizis is a Senior Manager in Distribution and Marketing in Financial [email protected]

Jessica Townsend is the Global OperationsProgram Manager for Wealth and AssetManagement [email protected]

About AccentureAccenture is a global managementconsulting, technology services andoutsourcing company, with approximately275,000 people serving clients in morethan 120 countries. Combining unparalleledexperience, comprehensive capabilitiesacross all industries and business functions,and extensive research on the world’s most successful companies, Accenturecollaborates with clients to help thembecome high-performance businesses andgovernments. The company generated netrevenues of US$28.6 billion for the fiscalyear ended Aug. 31, 2013. Its home page iswww.accenture.com.

This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or furtherdetails on any matters referred to, please contact your Accenture representative. This document makes descriptive reference to trademarks that may be owned by others. The useof such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association betweenAccenture and the lawful owners of such trademarks.


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