So I'm Jean-Pierre Lacroix. I'm president of SLD and I'm pretty excited about sharing with you a major study that we completed just a few months ago. Maybe some of you have attended my previous sessions. This is my fifth presentation at Financial Brand Forum. I want to thank Jeffrey and his team for inviting me back.
For some of you that may have attended my presentation three years ago on uh the future of financial advice where we identified that banks, finan credit unions are not providing the the level of financial advice that customers are looking for and it was a key factor for customer attrition but also a key factor for growth. last year was on stage presenting how important it is to make commitments to to the community and the importance of community banks and what strategies can community banks leverage to build loyalty through activation within the community. This year I'm here to talk about something that is o a bigger opportunity for you and that is in the next three years sorry next three decades we're going to see an incredible amount of wealth transfer. It was great to hear yesterday's presentation where we talked they talked a little bit about wealth transfer and the gaps that were happening in the marketplace between the generations. This research will highlight some of those gaps and some strategies we need to take to move forward.
A little bit about SLD. We're brand transformation agency. We coined the phrase the Blink Factor way before the book Blink came out. We actually coined the phrase in 1993. We believe that growth is going to come by creating emotional connections between brands and consumers.
Let's be candid. You know, your competition can match your prices very quickly, your offers, your products, but the relationship you have on the emotional level with your customers, the key driver of growth. We're a firm believer in that. There's lots of research that we've done to validates that. So, there's a $124 trillion that's going to change hands in the next 30 years.
Think of it. 124 thou th tr trillion dollars. That's a lot of money. The question is, will you capitalize on that wealth transfer? Will you be a winner in that raise to capitalize on that wealth transfer?
or your current strategy is actually getting in the way of connecting with those future inherent customers who are looking at a place that's going to give them that sense of confidence and reduce their anxiety. That's the question that we put to the test through research. What's interesting from a context standpoint is when you look at Gen X are going to hit 1. 4 trillion annually. Think of that $1.
4 trillion annually, right? and 14 trillion by 2035. That's a huge amount of money that's changing hands. Where is it changing hands? I think what's important to understand is the middle class is being hauled out.
You can see here that the top 2% of household control 44% of the wealth. So where do you think that wealth's going to go? It's going to go to the wealthy. What is your wealth strategy for the wealthy? Do you have a wealth strategy for the wealthy?
How do you appeal to this segment? Is your branch experience? Is your sales choreography conducive to attracting these customers? The other one is startling is 70% of transfers are going to be going to women. Women are going to hear a lot of wealth.
So, we did some digging. We pulled all the data we've done in the last 10 years and we created a digital persona of what this customer looks like and what they're looking for. I'm going to share a little video clip here to provide you with kind of context.
I'm not just a name on the econom.
I'm the investor. I'm juggling a career, family, maybe aging parents and my own future. And I need a bank that sees my whole life, not just my portfolio. I'm invested in retirement and protection products. I'm careful about risk.
And I'll admit, I don't always feel like an expert. Here's what I'm looking for. I want an adviser who listens first, asks about my goals, and explains things in plain language. Someone who connects every recommendation to my real life, my retirement, my emergency fund, the big milestones I'm planning for. I want a private, comfortable space where I can ask any question without feeling judged, and workshops at the branch that help me understand my options instead of just selling me products.
Yes, I use technology, but I don't want AI making decisions for me in a black box. Show me the tools, sit beside me, and walk me through them so I can trust how they work. If you want my loyalty, make me feel respected, understood, and valued. Give me great, transparent advice in a welcoming environment that reflects how important my money and my time really are. Do that, and I won't just stay with you.
I'll move more of my wealth to you and I'll tell other women to do the same.
If I interviewed your women customers in your financial institutions as they were walking out having a a meeting with a wealth advisor or a financial planner, would they say this? Would those would the statements hold true for your female customers in your institutions? Right? Because that's what they're looking for. So the ask was you know what is the role of the branch the physical asset in driving investment growth.
That's the question we asked. We went to 1,600 investors consumers who make investments and we also talked to you 750 bankers. We want to understand are the are the insights aligning how bankers, financial institutions, credit unions view wealth and and their customers wealth needs versus what the customers are looking for. One of the startling facts is this that when we asked are you happy with your financial advice your financial planners where you do your investments and 88% said yes we're happy but then we said are you looking at switching or moving your business 47% they're moving the business so it's kind of a contradiction they're happy but but they're looking at moving and there are key factors that I'm going to share with you why that is happening and how you can mitigate those risks because the growth isn't going to come from better apps, better technology. That's not what they're looking for because it's become table stakes.
You know your digital transformation journey started 10 years ago and everyone yes you're at different some of you are at different stages of digital transformation and now with AI it's changing a lot of that adding more challenges but the reality you're all on that journey and one app versus another app they're about equal in the in the eyes of customers but what isn't equal is the experience and how you make them feel how are you making your customers feel when and they're coming into your your physical spaces when they're interacting with your wealth advisors, how are you making them feel? Are they feeling a high level anxiety, a lot of confusion? Are you providing clarity as as you heard that persona talking about, you know, speak to me in plain words, make it easy for me to understand the information. Are you doing that? Are you trying to sell them products?
And so we looked at are all investors the same? So we have we had enough data to be able to define some personas and these personas these six personas emerged. So we've got the confident navigator. 14% of investors you know they're very confident. They know what they're doing.
They're very knowledgeable. They play both in cryptocurrency. They do you know direct investing. They also have an advisor. You've got persona number two the anxious delegator.
They're 23% of the investors. They're very anxious that my wife would fit this category. You know, what's happening in the marketplace? Are we going to lose our nest egg? You know, is our stocks ups?
So, our stocks down. Why are stocks down of should we be trading stocks? You know, because we're getting closer to retirement. We need to have funds to retire. Persona number three is the digital optimizer.
We actually uh did a um a podcast which is going to be released at the end of this month with Prosite and that podcast is all about the AI customer and what do they look for and I have a little video clip I'm going to share with you. But this group is AIcentric they're digital centric but they still come to the branch for advice. They still use the physical asset your facilities when they need that advice. Persona number four is the legacy builder. They're at the end of, you know, close to retirement.
They're looking at what are they going to hand down to their children. How do I protect my wealth from taxation and a variety of other risks? Persona number five is ambitious accumulator. They're young. They're looking at they're the first to get into cryptocurrency, getting into Bitcoin.
They're looking at ways to accumulate their wealth very quickly. And then Persona 6 is the reluctant participant. 7% of their investors. So we looked at what are their needs and behaviors through the lens of these personas. And so what I'd ask you is have you defined your personas for your wealth customers?
Do you have a clearly defined set of personas? Do you understand what each of these personas are looking for for you and your financial institution? If you haven't, this is a great opportunity to start looking at. you can leverage our study as a foundation, but obviously every institution has a different profile of of customers. It'd be good to understand what your persona is.
So, I'm going to walk you through some insights that came out of this study leading up to the importance of the physical asset. You know, inheritance is the largest growth moment uh and is also the largest risk. And so as we look at that transition of funds happening in the next 30 years, that's a great opportunity for you to build your wealth business to grow loyalty with your customers to have their entire portfolio with you. But it's also a big risk because what we found out was and and again we heard it last night is that there is a lack of integration between the wealth the people who have the wealth now and the people are going to inherit that wealth. 76% anticipate inheriting within a decade.
So, lots of anticipation that my parents when they pass away or they retire or they sell their business, they're going to inherit some funds. They need the funds because buying a house is very expensive today. So, the only way a lot of children are able to purchase homes is through the inheritance of their parents. But 34% switched due to poor relationship. I'll tell you a little story.
So, we have a wealth advisor. We've had him for 25 years. My daughter now is 37. We have a grandson. She wants to get a a fund for his education, right?
She could have gone to our adviser, which by the way, she does have investment with this adviser through a trust we created, but she went to her local bank and started the relationship with that adviser. And that's the gap, you know, is are your financial advisors having conversations with their customers about their children? Are they willing to have meetings with the entire family that talk about the inheritance or are they going to wait until they pass away and have the lawyers share the will and explain where the money is where the money is but not where it's going? Right? huge opportunity and a significant gap in both institutions and the time to connect with the audience with this segment is at the different life stages.
We in our AI study we looked at where where is AI used the most. It's used when they're starting their career. They want to make investments for the first time. It's when they bought a house. They're looking at how to balance investments starting to plan for the future.
It's when they're retiring. How do I protect my investments? These are key milestones. Are your products and services for wealth? Targeting these milestones.
Are you talking life stages or are you talking products? Because they're looking for life stage solutions. They're not looking for products. They're looking for solutions. Insight number two is the fear barrier greater than the knowledge barrier.
So we asked if if you're reluctant to invest, these are consumers who have little investment or people are investing but could invest more because a lot of money is sitting on the sideline. We asked them why are you not investing more? If you've got these funds, why are you not putting it into the market? And then we asked the bankers the same thing. Do you think they align the answers align to the barrier why people invest?
They don't actually. They don't. It's like two people having a conversation. We all had them where somebody's talking to you and you go, "They really don't know what who I am. They really don't know what I need, what's motivating me, right?
They're talking products to me." So from a banker perspective, 23% said, "The barrier to investing is knowledge. If we gave them more knowledge, we made them smarter. Did they invest more?" Yeah, maybe.
But not because what's driving the barrier for customers is the fear. Fear of the unknown, the fear of risk. Until you solve their anxieties, you can't sell them products. Until you understand what's driving their fears, they're not going to be listening to you because they're in their mind, they're going to go, "This is more risk. They didn't explain to me how to overcome my fears."
So there's a conflict here. How you communicate, your messaging, your marketing play an important role. And on the flip side, what's the retention factor? How do we retain customers? Brand loyalty.
So building credibility for your brand is really really important. But the other negative side to that, the reason they're not leaving you, if they're are switching, if they're if the reluctance to switch is the paperwork required. It's not easy to change investors. It's not easy to change investment houses. It's not change to change banks.
And so, it's not a positive. It's a negative. The brand loyalty is a positive, but the friction points a negative. And so, how do you balance those things? Because if you're going to amass that wealth, you really need to start looking at these switching friction points and eliminating them.
I remember TD, we were working with them and they launched a program where they would do all the paperwork switching the customer from whatever financial institution they had there. They would do all the paperwork, all of it. You would just sit in the background. They would make sure everything is done for you and they acquired a lot of clients through that process because they made it easy to switch. It was frictionless.
Insight number three is digital not replacing the physical. We heard it last night with a big debate. I'm I'm a firm believer and the research proves it that your physical assets and I'll prove it again today for wealth. Your physical assets your biggest growth engine that you have better than anything else. So yes, people will research with digital.
45% of advice seeking is digital. So they go and do their research digital. We all do it, right? We all do it. Google cloudy cloud AI some some of the AI platforms but 67 still prefer to have those discussions with people yeah they may do all that groundwork so that they they they come into a convers an intelligent conversation with the adviser but they're having that intelligent conversation with the adviser and that's the important factor and the branch plays an important role but it's lacking so you know as part of that experience is are you happy with the current experience you're having with your financial institution when it comes to wealth and in branch experience advice and service concerns are heirs of opportunity banks do and and credit unions do not score well and by the way the full study is available at the end you can there's a barcode you can download it and there's a lot more in I this presentation could take two hours so I've condensed it but there's a lot of great data we talked a lot about AI we've been tracking AI for the last five years when we first did the study of AI it was about the future of advice uh 1% were using AI but zero credibility they didn't believe in it today 64% are using uh AI for financial advice and 56% provide unbiased investment advice they believe that it provides unbiased financial advice because AI is not selling them a product it's looking at their life stages it's looking at their needs and it's talking to them on their terms, not the institution's terms.
And I'm gonna share you a little video of an AI forward consumer, how they shop for investments and what they look for.
I'm one of your AI forward optimizer customers. I live on my phone. I use tools like chat GPT and I still care a lot about credible human advice. Daytoday, I don't go to the bank, I go to your app. I check balances, move money, and manage cards on mobile and online.
And that's also where I want quick contextual advice. I only turn to branches or phone when the stakes are high. Mortgages, big loans, major investment moves, or when something's gone wrong. I use AI as my research assistant, not my fiduciary. I ask it to explain products and compare options.
But I still look to you for a credible, customized plan, clear tradeoffs, and unbiased recommendations. The branch still matters as an advice hub, not a transaction line. Give me private or semi-private spaces. Let me start the journey in the app and then pick it up in person or on video when decisions get complex. When you combine explainable AI with strong human advisers, you significantly increase my loyalty and the share of my financial life I'm willing to bring to you.
So yes, they use AI extensively. They're a digital first consumer. But when it comes to those milestones, they're looking for human advice and that's a great platform for you and they're looking for that physical four is you know differentiated value proposition anchor incredible plans and advice. You know as I mentioned we had done a study five years ago on the future of financial advice and when we asked consumers where do you go for financial advice 5% identified financial institution only 5%. Right.
And so big gap, great opportunity. So we ask what is and what is financial good financial advice and what does that drive loyalty? 81% good advice drives loyalty. And what two factors 27% credible plan and 18% customized to financial needs. So those are really important factors to look at.
Other aspects is access to experts, investment reports, access to ATMs and advice beyond investment. It was interesting that ATM showed up in the study because we looked at what's the physical experience, what are the things that are must-have when you when you're considering wealth and interesting enough, access to their money still plays an important role. So if you're thinking of moving, creating these wealth centers as many financial institutions have done and removing cash, it's a mistake. Point insight number five, this is the most startling. Your most knowledgeable customers for investments are actually your highest risk customers for attrition.
And the reason for that, if you go back to one of my first slides, is they don't have the fear level. They're knowledgeable. They don't have the fear level of switching. They know how to play the market and understand the different tools that are available to them. So 22% switch advisers when inheriting funds.
26% move their investment to a new provider. 3% switch some investment to another provider. I call that stealth attrition and switch from a bank to an investment provider. So there's a lot of switching going on here. This is your high attrition risk segment.
It's your most profitable segment, but it's also your highest risk. So, what are you doing? What what are the plans you're doing? We do work around the world. So, we do a lot of work in Asia.
Their level of strategy for wealth advisor for wealth is on a different planet. I mean, the experience that those customers have for wealth, you can't there's nowhere in North America that you can compare it to, right? They've really figured out what motivates these people to stay loyal to their institution, their adviserss. Which brings up to point number six is the physical space is a differentiator. I'll repeat that.
It's a differentiator. Why? Because it reinforces trust. You know, people are investing their future retirement funds or the legacy to their children and you don't have a physical presence. I don't know about you, but I'd be very concerned that your organization is stable, that you're credible.
So, the physical presence is critical. It helps deepen the relationship, human contact, empathy, understanding, building trust, right? It also a great platform for learning and educating. 28% report physical space as extremely important in choosing or staying with an advisor. More startling, 31% open an investment account due to an inbranch experience.
31%. That's a huge number that you can capitalize on. So we in our research looked at four different concepts for the experience. We looked at in branch office which is prevailent. We did US banks channel strategy last year and obviously a lot of the branch their flagship branches have advice centers or advice offices.
I'm sure that in your financial institutions some of your markets some of your branches have advisors. Most of them unfortunately are rotating which is really not communicating the right message if you're talking about stability and credibility. Then there's the inbranch wealth learning area. This is prevail in Canada. They have these wealth centers, these advice centers.
RBC has about 150. CIBC has 100. Scotia has about 75. And these are dedicated centers. They're not doing well.
By the way, wealth investment dedicated branch. These are branches dedicated to wealth. Uh but these are upscale but they're in the branch. This is what happens in China. In China, you go your conventional banking and then there's a door over here and you go to your private wealth banking customer and there's a whole different experience.
And then you have your wealth investment center. A lot of you have in your towers. We're currently working for a large California institution. We're doing their flagship branch and on the 57th floor they have their wealth center which is where they create their activities and their events. So we ask you know which ones of these are going to drive growth and really at the end of the day it's about transaction hub.
It's about this emotional hub. We looked at the personas and we looked at which concept. So the tower and the in branch are the concepts that did very well in addition to the advice centers. Why? For the tower concept, it had the highest switching intent, had the best relationship retention.
So a lot of positive things for this concept, but you can't have one in every corner. These are destination locations, right? And then the branch experience where you have these dedicated offices within your branch because it's convenient. They're already doing banking with you. They're already going to your credit union or your community bank or your regional bank, right?
There's a great opportunity to intersect them and to introduce them to an advisor and to look at opportunities for them. So when you look at that ecosystem of the channel strategy that you need to look at at the core is the tower idea but then you have this feeder network ecosystem if you like of in branch wealth experiences leading to this inbanch learning center. Now in Canada they're called advice centers. They're not for learning. They're really for selling products.
What customers are looking for are these centers for education. They're looking for areas that they can learn. Specifically, the younger generation are looking for areas to learn. So then we looked at filtered through our think blink. Think blink is a process of emotional connection.
We have an AI model that evaluates brands through the seven tenets. The heart wins. That's really understanding what is the emotional word that you own, the emotional connection you own. What's the power of design in your organization? What's the story you're telling your customers, your purpose, your values, your beliefs?
What's the context? Who who are the personas that you're targeting? And then belonging. Everyone craves to belong. It's a key driver of growth is a sense of belonging.
And then how are you measuring these emotional connections? And then finally, how are you futurep proofing? All this wealth is happening. You can't convert all your branches that quickly to to appeal. You know, what are the strategies you need to take?
So, I've laid them out here. Reframe the value proposition of emot from functional to emotional. Talk to their fear. You know, put their mind at ease that you know that they don't have to worry. Create visual metaphors of the wealth journey.
Understand that they're on a journey and you're there to help them on their journey. Leading with the emotive compelling story. how you've helped other people in the neighborhood in the community. Implement behavioral persona segmentation. You saw the one we shared on the screen.
What is your persona? It helps your sales team, your wealth advisor understand who are these customers and understand that their needs are different. They're not just one homogeneous group of customers because of their age, right? They have very unique specific needs and products that meet them. Build investor communities on shared values, right?
Create these communities, these networks. Create emotional engagement dashboards. So, evaluate how is your brand connecting emotionally. And there the beauty today with with technology, there's tons of tools available to for you to evaluate. One of one of our clients, everything is filtered through emotional equities.
Yeah, rational things are important, but everything they'll look at is through a filter of emotion equities development AI. So if you're to look at a plan year one, really conduct equity on what emotional equity do you own for your wealth advisors and your wealth customers, you know, con, you know, pilot concept D, which is the tower. look at how do you leverage that, you know, then move on to roll out concept B. You know, look at, you know, how do you create these learning hubs in your community that that really confirm that you're in the wealth advice business and that your advice is centered around the customer needs, not your needs. And obviously, year three is optimize AI and some of the other elements.
So, I'm just going to wrap it up here. We're going to open up for some questions. And uh for the first three people who are brave enough to ask me some questions, I have my book. Uh on the right hand side is the dable study and if you want even more tables or segmentation of the data, we're happy to do that for you. And then you can follow me on LinkedIn where you can see the AI presentation on uh the AI customer and also on women and a variety of other white papers.
So I'm just going to open up now to the room. Does anybody have any questions? Yeah, gentlemen.
What do you attribute the 70% of transfer to women specifically? Is that a function of life expectancy in widows or is it something different for a younger generation?
It's a study that JP Morgan Chase did last year. It's public so you can check it out on JP Morgan Chase. And it is the fact that uh women have a longer life expectancy than men. Uh more women more women are being born. Hence it's a natural progression of life that you're going to see more women inherit the funds.
Anybody else have question? I got two more books.
Yep. focus right now on attracting one of our strategies to look so kind of in this area so we don't have to kind of work in 20 years when they are inheriting some of these things what do you think are the things maybe that younger those younger generation specific that we could focus on to let them start educating themselves through So the question is you know they have a program for Gen Z's uh that are around wealth wealth investment that is a kind of 20-year play and looking at what are the activities and strategies we need to do to to to uh to drive that. Well interesting enough there was a recent article in the news uh that Gen Z's are becoming heavy investors uh in Bitcoin and a lot of the non-traditional investment tools. So I would say to you understand where they're investing now and why and then just amplify it because they're investing in those products because they don't want to follow their parents model. They want to create their own.
And if you're there to provide them the advice on the products that they're looking to invest in, then you become an expert. And you become an expert at the beginning of their journey. And as they inherit those funds, you'll have built that relationship, that continuity that is lacking today in the marketplace. Great question. Anybody else have a question?
Yeah. Great. Here you go.
Yeah. Yeah. So the question is if we're a small financial institution, you know, are we still able to provide those services, products, right, or experience? Yeah, you do because it's it's very localized solution, right? So your physical location is an opportunity to capitalize on wealth.
The first thing you'd want to do is figure out how many of our customers have wealth accounts with us. How many are investing with other financial institutions? What are the products that they're looking that they're not getting from those institutions? What what void can you fill? And it could be a small wedge in that relationship because they're coming to you on a you know once a month, once a week.
There's a real opportunity and and start by building a trust and the cred credibility because understand their motivation is fear. So if they feel that you're not competent or not credible, there's no way that you're going to be able to sell them anything. Thank you. Any other questions? I'm out of books, but yeah.
Go ahead. Do you have any creative examples of ways that banks can cross that threshold and get to work with families and get to know their children? You know, I mean I saw workshops was one of the things but anything that you've seen has worked because Yeah.
Yes. It's it's a a financial orientation meeting between and this is the challenge is you know are the parents willing to share the the inheritance that they're going to give their children. A lot of parents are reluctant to share how much their their kids are going to inherit. So it's breaking down and understanding what are those barriers of sharing and then developing a plan and building allowing that advisor to build that relationship with that customer and his children and typically you know life stage is a great moment for that. So, as they're going to university, they're planning to go to university.
You know, you've got funds for that, the investment funds for education. There's a great time to connect with them. Then bring the customer in with his his children, talk about the plans, build a relationship, and then continually build that relationship with the siblings. Very often you have that meeting, the investor, the wealth advisors have that meeting, and then they forget them, right? It's about building a relationship.
There's also a digital page. So if you're interested in learning more,
yeah, where there's a need, there's a tool that's out in the marketplace. And there's more. There's I'm sure there's more tools. But again, have a plan. Look at what's available.
Uh, but it's that idea, but at the end of the day, they want relationships with people. I'll wrap it up now. Thank you very much for coming. I found your way up here. Thank you.
