Home » The Emergence of New Generation HNIs – How are they Investing?

The Emergence of New Generation HNIs – How are they Investing?

The Emergence of New Generation HNIs - How are they Investing?

According to a Forrester prediction, by 2020, almost half of the world’s adult population would comprise millennials. Even Gen Z is entering the global workforce and would start looking for investing their earnings. In India— one of the fastest-growing economies globally — HNI growth is 6% every year also expected to grow manifold in the next two decades.

As it is common knowledge, India is a young country with about 28% of its population between ages 20 and 35. Since this upcoming new generation of HNIs would be more tech-savvy and digitally inclined, we can expect digital-infused technological disruptions in the financial and banking sectors.

With the continually rising purchasing power of newer generations, there is an urgent need for the finance and investment sector to shift its focus from result-based to goal-based framework.

How are New-Age HNIs Different from Their Previous Generations?

Gen Y HNIs are more aggressive investors than its predecessors. As they have grown up along with the ascend of technology, they are more digitally capable, well-informed, and educated. Also, they have a higher risk appetite and demand faster results and returns.

The new generation of investors has better clarity and is more dynamic when compared to their earlier generations of investors. Another key differentiator that sets the younger investors apart — more inclination towards current spending than saving for the future. As this generation, investors are still beginners; they rely on their wealth manager to provide them with precise and simple-to-understand financial data to make quick financial decisions.

With an influx of investment options, the current young generation has a lot of variety to choose from to invest their money. As a result, Gen Y tends to prefer a diversified portfolio that consists of novel products to achieve sophisticated asset allocation. Earlier generations were not so adaptive to new products and preferred sticking to what they knew well. Unlike their previous generations, young investors are also open to new and innovative investment strategies and unconventional asset allocations. For instance, a young investor’s portfolio may consist of a balanced blend of equity and debt-based products and a small percentage of the funds invested in the private equity or hedge funds.

What Does The New Generation of HNIs Need?

As the new-age HNI investors look for faster returns and are ready to make bolder investment decisions, wealth managers also focus on such investment strategies to better cater to this customer base. With the rise of the entrepreneurial millionaires in the past few decades, wealth managers had to adjust to their novel ways of investing. We bring you the following key parameters that will help Gen Y select the right wealth manager:

  • One of the primary needs for this generation is to get real-time and accurate information when demanded.
  • Along with the timely availability of the data, this generation also expects to continually monitor and manage the performance of their diversified portfolios. Hence, a wealth manager serving this demographic needs to have proficient presentation and data representation skills.
  • Apart from being well-informed and educated, this new generation of investors are also well-connected with their peers and have strong networking skills. Through social media channels or online forums, they take suggestions from peers and get expert market opinions within a few clicks. This generation is also one of the most socially and ethically aware ones — making it essential for them to associate with brands following ethical practices. Therefore, a wealth manager also needs to be socially and ethically conscious to serve this generation.
  • Efficient digital capabilities are of paramount importance for the new generation of HNIs. To ensure a long-term relationship with the investor, the wealth manager needs to implement a robust digital architecture— social investing, mobile applications, online services, and 24/7 support.

How can you use this Information?

  • Does your wealth manager offer you customized investment options? In times of uncertain financial conditions and economic distress, not all investors would want to comply with similar investment strategies. An individual goal-based investment plan helps younger generations to build trust with your wealth management services.
  • Do they offer flexible investment options such as staggered investments, lumpsum, SIP.
  • Are they open to work with any broker or platform or insist on captive holding your money?
  • Are they SEBI registered investment advisors with formal processes and systems in place?
  • While leveraging technology, do they offer you personal connect?

The expectations and the investing habits would change from one generation to another. With the advent of technology in every aspect of life, the change in preferences and attitudes is quicker and more intense. What is right to Gen Y may not hold good while dealing with Gen Z investors. Hence, wealth managers need to reinvent themselves with changing demands.