Unlocking the Potentialof the Y (and Z) Generation in

Wealth Management

Imre Rokob

Unlocking the Potentialof the Y (and Z) Generation in

Wealth Management

We at Dorsum

Our customers by sectors:• Banks

• Asset Managers

• Brokerage Firms

• Insurance Companies

• Factoring Companies

• Pension Funds

Clients and Partners

Our customers by sectors:• Banks

• Asset Managers

• Brokerage Firms

• Insurance Companies

• Factoring Companies

• Pension Funds

Partners:

Today’s session:

Are robo advisors a real threat for new generation customers or a trendy gizmo?

Why hybrid advisory can be the answer?

Ways to become digital hybrid advisor and to service future client base?

Are robo advisors a real threat for newgeneration customers or a trendy gizmo?Are robo advisors a real threat for newgeneration customers or a trendy gizmo?

Battle of Generations

Generation Y - Millennials•born in 1977-2000•Dedicated device: PC, tablet,smartphone

•Financial decision: Face-to-face,but information can come fromdigital source.

Baby Boomers•Born: 1945-1960•Dedicated device: TV•Financial decision: Face-to-face ideally, but telephone andemail if required. Increasinglywill go online if they can savetime.

HERITAGE

Generation X•Born: 1961-1977•Dedicated device: PC•Financial decision:Online – would preferface-to-face if timepermitting

Generation Z•born after 2000•Dedicated device: tablet,smartphone, wearabletechnologies (augmentedreality, gamification)

•Financial decision:Solutions will be digitallycrowd-sourced

HERITAGE

Generation Y - Millennials

MILLENNIALS ARE

2.5XMORE LIKELY TO BE AN

EARLY ADOPTER OFTECHNOLOGY

THAN OTHER GENERATIONS

http://www.millennialmarketing.com/

MILLENNIALS ARE

2.5XMORE LIKELY TO BE AN

EARLY ADOPTER OFTECHNOLOGY

THAN OTHER GENERATIONS

Generation Y - MillennialsMobile first attitude: 22.9 MILLION – NUMBER OF

BANKING APPSDOWNLOADED SO FAR,

A RISE OF

8.2 MILLION IN ONE YEAR

Consumer behaviour and expectations have beenirreversibly shaped by digitally nativecompanies – the smartest banks areaddressing this expectations gap, but the paceneeds to accelerate.

22.9 MILLION – NUMBER OF

BANKING APPSDOWNLOADED SO FAR,

A RISE OF

8.2 MILLION IN ONE YEAR

https://www.bba.org.uk/publication/bba-reports/ world-of-change-2/

EY Financial Services - Europe | The Way We Bank Now: World of change

“Millennials and money The unfiltered journey” by Facebook IQ, Jan 2016.

Why are they soworthy?

Generation Y - Millennials

As a collective group, the Mass Affluent control more than $7.5 trillion in investable assets.BAI, Engaging and Retaining Mass Affluent Customers, 2014

Why are theyrelevant?

Generation Y - Millennials

Top priorities… They are Planners

Merrill Edge Report

Top priorities… They are Planners

85%track and managetheir money/budgeting

77%balance short andlong term goals

84%save for retirement

Generation Y - Millennials

Why are they(digitally) important?”

Affluent Millennials are reshapingthe future of the finance industry andforcing drastic changes to financialservices providers’ business modelsand marketing strategies.

* Schwab, Fidelity, Vanguard, TD Ameritrade Source: Cerulli, BlackRock Global Corporate Strategy 2015. Thismaterial is not intended to be relied on as a forecast. There is no guarantee that estimated numbers will come to pass.

Capgemini – Evolution of automated advisors 2016

”Affluent Millennials are reshapingthe future of the finance industry andforcing drastic changes to financialservices providers’ business modelsand marketing strategies.

2015 United States Affluent Millennial Research Study

Robo advisorsRobo advisors

ON AVERAGE,59% OF

MILLENNIALS GLOBALLYEXPRESSED COMFORT WITHROBO-ADVICE, WITH 63% TRUSTING IT;

WITHIN EUROPE,70%WERE COMFORTABLE WITHROBO-ADVICE, WITH 65% TRUSTING IT.*

ON AVERAGE,59% OF

MILLENNIALS GLOBALLYEXPRESSED COMFORT WITHROBO-ADVICE, WITH 63% TRUSTING IT;

WITHIN EUROPE,70%WERE COMFORTABLE WITHROBO-ADVICE, WITH 65% TRUSTING IT.*

*Legg MasonKPMG Report: Robo Advice Platforms Will ManageUS$2.2 trillion Worth of Assets by 2020

Robo advisors

Why hybrid advisory can be the answer?Why hybrid advisory can be the answer?

Don’t be a dinosaur, be a Hybrid.Given the high level of client demand and growing competition from non-traditional players wealth managementfirms must make it a high-level priority to develop a strategy for investing in automated advice.Evolution of automated advisors 2016

KPMG advises banks: “The opportunity for banks is ripe, but you must act now to capture your share of themarket. Otherwise your clients will eventually look for these solutions at other institutions.”

Ways to become digital hybrid advisor andto service future client base?Ways to become digital hybrid advisor andto service future client base?

Innovationinthe

Innovationinthe

Recipe for success - Ingredients

Innovationinthe

Dedicated projectteam

End user testingFocus on innovation

Use the latesttechnology

Innovationinthe

Be agile

Battle ofgenerations

Battle ofgenerations

11

44Full robo is

not theanswer

Full robo isnot theanswer

@ Dorsum making innovative products is a must

33 5522 Wealth Management:

• Automation where it is applicable• Real time availability of the advisor• Proactive approach from the advisory side• Goal based advisory

Battle ofgenerations

Hybrid casestudies

Hybrid casestudies

Mobile firstattitude

Mobile firstattitude

44Full robo is

not theanswer

Full robo isnot theanswer

Innovationrequired

22 Wealth Management:• Automation where it is applicable• Real time availability of the advisor• Proactive approach from the advisory side• Goal based advisory

Digitalization in Wealth Management

Usage gap (%)

••

•Social Media•

•Mobile/appPodcasts/videos

Automated (Robo)advisory

•Chat

FOR MILLENNIALSDIGITAL SOPHISTICATION IS THE

3rdMOST POPULAR FACTOR

IN CHOOSING A WEALTH MANAGER

Digitalization in Wealth Management

Interest(%)

Call for development Strong call for development

No need for focus Continuation

•Social Media•Online Banking

61% OF MILLENNIALSSAY THAT DIGITAL INNOVATION IS AREASON IN SWITCHING A WEALTH MANAGER

FOR MILLENNIALSDIGITAL SOPHISTICATION IS THE

3rdMOST POPULAR FACTOR

IN CHOOSING A WEALTH MANAGER

BCG Global Wealth Client Survey, 2016

Traditional players vs. Robo advisors

Robo-Advisors:

Pros:• More cost efficient than traditional players• Lower initial investment required• Your rich level does not count, all clients are equal• Excluding the emotional factor

Cons:• The scope is limited, so no comprehensive financial

planning• Non individual goal and risk-tolerance profiling• Overmuch automatic• Limited set of funds you can invest in• Impersonal: no chance to ask from a human

Traditional Financial Advisory Firms

Pros:• Personal contact during a phone call or a meeting• Flexible, because you can make real-time

decisions and not blocked by algorithm• Wide-range of knowledge and expertise you can

count on

Cons:• High level of entry “fee”• Sometimes one for all products because of the

company push• Slow technology adopters• Old fashioned customization• Impersonality if your portfolio is not big enough

Traditional players vs. Robo advisors

Robo-Advisors:

Pros:• More cost efficient than traditional players• Lower initial investment required• Your rich level does not count, all clients are equal• Excluding the emotional factor

Cons:• The scope is limited, so no comprehensive financial

planning• Non individual goal and risk-tolerance profiling• Overmuch automatic• Limited set of funds you can invest in• Impersonal: no chance to ask from a human

Traditional Financial Advisory Firms

Pros:• Personal contact during a phone call or a meeting• Flexible, because you can make real-time

decisions and not blocked by algorithm• Wide-range of knowledge and expertise you can

count on

Cons:• High level of entry “fee”• Sometimes one for all products because of the

company push• Slow technology adopters• Old fashioned customization• Impersonality if your portfolio is not big enough

Dedicated project team

Use the latest technology

Use the latest technology

Virtual AdviceVirtual Advice

Chatbot in wealth management & financial planningChatbot in wealth management & financial planning

Thank You!Imre Rokob

Thank You!

DORSUM CO. LTD. | H-1012 Budapest, Logodi street 5-7. | Phone: +36 (1) 487 3030 | www.dorsum.eu