Ole Bindel is a Private Wealth Manager in Denmark with over 25 years of experience. Below, he outlines the changing nature of his industry and how he sees it developing in the coming years. 

Handing over your fortune is not an easy decision. It represents, potentially, transferring the results of one or more lifetime’s worth of effort. It may be your great-great-grandfather's small business that has created generations of value for your family, employees, and society, or maybe you created it all yourself in the last five years. 

Deep inside, you know you're not immortal, so what's going to happen? When is this going to happen? And how is it going to happen? It is both an emotional, human, and technically difficult process, and there are typically far more questions than answers. 

Is the next generation ready? How should the power be distributed? Will they and can they manage it? After all, they have just played in the garden and may have barely finished their educations.

And on the other hand, the next generation is typically just as insecure. Can we live up to previous generations? How will they react if we want to make major changes?  

It is typically a process with many dilemmas for both the older and younger generation, which often seem insurmountable and/or very difficult to address. 

Many dilemmas are the same as a thousand years ago. Others are new and continuously developing, such as more complex tax rules, new financing possibilities, and technical possibilities.

But in any case, passing down your wealth is one of the biggest, most difficult, and complicated decision-making processes you must go through as a wealthy person.

Fortunately, there is a lot of help available. Banks, accountants, lawyers, consultants, specialists, friends, and acquaintances. There are plenty who would like to help and many who are handsomely paid. 

As a private wealth manager, it's not a blue ocean. It's very red. So how do you relate to this difficult task for the family, where the likelihood of bank switching is high?

Efma has asked several of its members how they work with in the wealth transfer space and how they view the generational advice of the future.

For myself, it's all about trust. The customer chooses to work with those they trust to help them best and/or cheapest. And it is about trust from both the older and the younger generation. It is then important to both mentally and systemically see the family as one customer with an overall profitability. 

Too often, the young generation is not in itself profitable, but it is an important investment. It is easier and cheaper to retain the younger generation than to acquire new customers.

But trust alone isn’t everything. It must, of course, be supported by good and relevant value propositions, digital solutions, and internal structures and processes. 

In my experience, you can’t necessarily approach both the 20-year-old heiress who is breaking away from her parents, the newly established family in their early 30’s and the parent generation in the 60’s with the same concepts and advisors. 

I have previously been very successful in hiring 28- to 32-year-old private bankers to help young people, while at the same time offering other concepts and other types of events, which have included both education and social activities. 

A young advisor can better relate to the problems a young person has when leaving home, and young people can better see themselves at events with peers than many retired business owners. 

It lifted the overall profitability of the family and customer satisfaction of both the older and the younger generation when the young people were well taken care of. 

Of course, it poses challenges for wealth managers when different parts of the family are advised by different advisors. This is especially true of the very wealthy families, who may even have several businesses, private wealth, and several family branches spread across geographically large areas.

Therefore, you must have both a strong system support that binds family members together so that you have a comprehensive family strategy and, for example, know what you earn from the entire family, so that you invest what is necessary in the next generation, even if they are not in themselves profitable.

Then, as a wealth manager, you need to have a team around the customer who can work together seamlessly so that the customer barely even notices that are several people dedicated to the family. This requires governance, coordination, cooperation, and follow-up. 

Segmentation is generally a hot topic, and Efma has also asked members what they think when they hear the results from an Accenture analysis that shows that today's advisory models don't work for women.

Personally, I'm not surprised. How would the business model work? After all, the current model has been developed over decades and targeted at a wealthy 65-year-old man.

A lot is happening though. In Denmark, 3 of the 5 largest private banks are run by women. But these are still women who have helped develop past offerings to the 65-year-old man.

There are more and more women who have either made a fortune themselves or who are the “family finance minister”, and this requires the development of the overall value offer in the same way as the rest of the diversity in society does. One-size doesn’t fit all. And everyone doesn't look like a 65-year-old man. So, I am happy to read that everyone is working to target offerings to the individual customer.

Personally, I don't believe in women as one segment. Yes, it exists. In Denmark, we have specially segmented offers for women like Ophelia Invest, Femaleinvest or special offers through private banks.  

But women are not necessarily a homogeneous group. Yes, there are characteristics, and several - also Danish - analyses show that women generally get higher returns on their investments than men.

But I believe that new digital opportunities with data, AI, analytics, ML etc. provide opportunities for much more fine-grained segmentation. And thus, women as a segment become a transition step, because we can profile better and better until we hit “segments of one” in the future. 

Before we get there, however, it requires the value offer to be expanded to accommodate men, women, other sexualities, young, old and others.

Caixa Bank describes, among other things, how they look at 30 different variables, including gender to segment customers so they can make targeted offers. The development is already in full swing and other industries are much further ahead than the financial sector. In our sector it is only going to be keep going faster and faster.

I am not aware of 100% digital solutions for wealth transfer for wealthy families anywhere on earth. Although I admit to not having complete knowledge of every offering.  

There remains complex personal, emotional, and tax questions to be answered. I think it's like so many other processes – sub-elements can be automated, and processes can be digitally supported to make it easier and better. 

In my experience, young people, as with older people, are insecure when they first face an important and larger task, such as buying a first home, starting a business, or transferring wealth. There is no formal education for these types of matters. They are complex and carry great significance for most people.  

And that's why trust matters so much. It has become much easier to obtain information, but is it information that suits me – do I have the same preferences? Am I in the same situation? Is it the same tax rules?

So, my experience is that even though young people are born digital, and the elderly have become more digital, for the vast majority there are still situations where they would like to hear what trusted advisors have to say.   

It changes over time, because when the customer can do something on their own, they would prefer to do it, even on Sunday mornings, before the family lunch. 

For most affluent and private banks, it's all about finding the difficult balance between high-touch, high-tech, and profitability. Some customers would still like to meet, while others take on more responsibility themselves. Specifically, in relation to wealth transfer, it is a situation most people only have to do once. However, some inherit themselves before they must pass their own wealth on many years later. 

Generational change has taken place for as long as there have been people, and generational change will always occur in the future, until eternal life is invented. 

It has gone from taking place in a very solid setting defined by a culture where property, land, animals, etc. were passed on to the next generation, typically to the eldest son, to today being more and more complex in line with increasing wealth, new cultures, and increasingly complex tax rules. 

Both the industry-wide business model and the business model for each provider are changing. 

Digital developments, with AI, ML, Blockchain, more advanced analytics options, big data, etc.  will continuously contribute to digitization and automation of processes, and the development of more advanced segmentation models, consulting tools, or robots.

As always, there will be two fronts – those that can deliver the best value propositions for customers, and those who can make the most efficient processes and can therefore compete on price. 

The limits of personal advice will be lifted, or you must pay for the advice, as traditional sources of earnings are not sufficient to bear the rising costs. 

This digitizes the end-to-end process for the smallest customers, while maintaining hybrid models for the larger customers or those who want to pay for specific services. 

Traditional wealth managers will continue to be challenged by WealthTech, FinTech and probably BigTech, in parts of their business areas, and will continuously adapt their business model and value propositions to new competitors and digital solutions.

Wealth management, as with all forms of banking, is being disrupted by technology. Technology in wealth management even gets its own moniker: WealthTech. But technology in the affluent space is different in the way it is deployed and used to serve customers. That is because when dealing with large sums of money and family inheritances, mass automation won’t do. The human touch is still required. Every wealth manager we interviewed for this report is keenly aware of that fact. That is why many of them discuss the hybrid model as their preferred method of servicing customers in coming years. 

Beyond technology, there are two growing trends that are having a major impact on private banking: ESG investing and women’s growing share of wealth. ESG concerns are particularly important as money is passed down to younger generations who are far more conscious than older generations about where and how their money is being used. When it comes to advising women in wealth management matters, advisors are having to change a model that been built around men for decades. These twin forces, combined with technology, are causing significant changes in what was typically a more traditional industry.

We posed questions about all of the above – and more – in the following interviews. The responses will give you a better idea of where wealth management stands today, and how some of the top minds in the industry are approaching the new challenges.