Cetif: young customers need young bankers

Generational turnover of private bankers is among the great challenges of wealth management.
The current environment is leading financial institutions to rethink strategies to integrate more and more young professionals into the sales network.

Generational turnover in wealth management responds, first and foremost, to the need to be more attractive to new generations of clients. In fact, although academic studies have pointed out that the age difference between client and advisor does not have a significant impact on portfolio performance (Tauni et. Al, 2020), it is undeniable that proximity in age allows young bankers to better understand the needs and preferences of clients of the same age.

In addition, the centrality of generational change for wealth management is an urgency that stems from the demographic condition of Italian bankers, who are mostly of adult age, and the current digitization process.

With reference to the demographics of bankers, according to the latest survey by the Cetif, the research center ofUniversità Cattolica del Sacro Cuore in Milan, one in two private bankers is over 50 years old while this value increases for financial advisors where two out of three are over 50. 

This means that, in the short to medium term, wealth management will be competing to attract new talent to the industry. Competition that would seem likely to be tougher in the coming years given declining population demographic trends , the "brain drain" phenomenon, and the increasing attractiveness of other sectors such as tech and start-ups.
The number of women bankers, which is growing but still limited to 33 percent, also indicates that in generational change particular attention will also have to be paid to the gender gap.
And, of course, not least, the digitization process, which has begun in recent years for the wealth sector as well, is driving a digital gap. 

The future is shaped by the increasingly pervasive use of new digital tools and channels.Artificial Intelligence, generative AI, and digital platforms will become the norm in wealth management, and the introduction of these new technologies will surely bring profound organizational and skills changes that will bring about a new way of working: a hybrid logic in which the human and digital components will be intrinsically linked. 

In this context where technology permeates the workplace, the so-called "digital native" generation will certainly be in a more favorable position due to their greater familiarity with technology and propensity for change.

Consequently, a priority for the wealth management industry is to ensure the intergenerational transfer of knowledge, to support younger people to develop the interpersonal and hard skills needed to succeed in managing clients effectively. It is, in fact, well-established evidence that experience and knowledge decisively influence a client's choice of advisor (Zhang et. Al, 2021). 

Strong focus, therefore, also on organizational training and mentoring practices to support defined and certified development paths.  

In conclusion, generational change in wealth management is a complex challenge that requires a well-defined and structured strategic response. Although the need to adapt to young clients' preferences is an important driver, demographic issues and the digitization of wealth management will be the main drivers of this change. Finally, targeted investments in training and mentoring are essential to develop the skills needed to meet future challenges and ensure high-quality service.