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Millennium bcp: From Gen Z and Millennials to older generations - investment needs & customer journeys

Publish date: 13 January 2022

João Forjaz Trigueiros, Head of Affluent Segment Strategy at Millennium bcp, highlights the latest investment journey transformations at the bank.

Some studies suggest heirs will look for a new financial advisor after inheriting their parents’ wealth - What are you doing to cultivate family loyalty and prevent heirs from moving their money to different institutions?

In Portugal, the aging of the population and the low birth rate represent major challenges for the coming years. In fact, Portugal has one of the most elderly skewed distributions in Europe with more than 23% of its population over the age of 65. Consequently, family loyalty plays an important role in banking strategies. Millennium bcp tries to work an heir’s relationship by providing family incentives to group their banking relation (“Family Advantage”) with better family account and bundling price conditions, insurance discounts, and even incentives to aggregate mortgage and personal loans in Millennium bcp by providing family discounts. In addition, in terms of servicing, for senior affluent customers, Millennium bcp has the option to aggregate the family banking relation in one sole affluent Relationship Manager. 

When it comes to investment, together with our insurance partner we have launched in the Portuguese market an innovative solution of decumulation pension funds which ensure both a monthly income while keeping a portion of the financial assets invested in diversified strategies with potential for growth for heirs. In the case of real estate capital gains, the solution also provides additional tax advantages, ensuring a holistic approach towards next-gen financial assets. 

This strategic approach towards family management allow us to boost confidence over heirs and mitigate potential investment outflows. 

How do you approach advice in terms of inheritance? How does it differ from typical financial advice?

We guide customers through the importance of having a dual strategy for the short/mid (day-to-day senior expenses) and long-term (heirs). By rolling out the first decumulation solution in the Portuguese market, focused on retired senior customers, we provide guidance on different personal finance and investment scenarios that guarantee both monthly inflows for senior customers and the steady financial assets growth for heirs. 

Millennium bcp also implemented a simplified inheritance process for affluent Customers, creating a dedicated back office team to ensure dedicated know-how, centralized communication, and document validation. It is an emphatic process with good results so far. 

How different are Millennials compared to their elders? How different are their expectations and behavior?

There are a few trends that make today’s Portuguese Millennials’ situation different when comparing with members of the preceding generation. The share of young adults with a bachelor’s degree or higher has steadily climbed in these generations which directly impacts the way they bank. Recent research found that Millennials in the major advanced economies are much more financially literate when compared to older generations. However, starting income levels and the wealth gap vs. older generations impact the concern about the present vs. future and they typically struggle to establish a budget to help with other financial goals. 

They are also typically more focused on social values when banking and investing, particularly demanding products with high-sustainability standards. And at the same time, they are very pragmatic and rely more on self-learning. They show high expectations for the quality of the services and they don’t mind changing banks shifting to competitors who offer more favorable conditions or a better experience. Although not fully digital native, they demand remote convenience, excellent CX and mobile experience design, full cost transparency, real-time investment product information, cost-efficient products, and values-based investments. 

We found that Millennials are keen on taking risk, while they typically are fond of theme-based investing and they engage more with investment monitoring features.

Millennium bcp recently designed a new strategy regarding young pre-affluent & affluent customers, having already rolled out a new remote distribution model with specific product offering, remote management tools and new customer journeys since we acknowledge that these customers want financial services that fit how they live, demanding speed, personalization and quality guidance. 

How have you transformed your wealth management offer to satisfy the new generation? And how do you engage potential new customers?

Millennium bcp has been working in recent years on transforming its retail investment model to serve different personas through transformation of its product offering, customer journeys, servicing processes, training, and analytics. 

We have implemented a new investment model with three different services which target different types of pre-affluent and affluent customers based on the level of income & financial assets, investment experience and channel preference: Execution-Only, One-Time-Advisory, Portfolio Management. Several new features were added to Execution-Only & One-Time-Advisory targeting new generations. 

Concerning the Execution-Only product offering, new passive investment products are being added to digital journeys, namely a set of Exchange Traded Funds as well more visibility towards ESG products. 

New digital customer journeys were implemented with a customer-centric mobile first approach. Through a simplified investor questionnaire (e.g. customer-centric wording, FAQs on technical terms, better UI) it is now possible in Millennium bcp’s APP to buy investment funds (national and international open architecture), ETFs, and certificates.

Soon goal-based investing will be rolled out, a feature particularly important for newcomers (retirement planning & general investment), ensuring mobile journeys that help new generations in regular investing. 

Through enriched product data (third party APIs), Millennium bcp now brings full transparency on product info and features such as historical returns, benchmark comparison, sustainability & carbon ratings, negative screening filtering (investment in animal testing, arms/ weapons, etc.) and particularly important for Millennials, theme-based investing (e.g. Technology, Sustainability, Energy, Natural Resources, Gold). 

Financial literacy content is now embedded in each journey. All these features in our main APP complement our MTrader App, targeted solely to hard investors.

Recent customer research has shown that >70% of our customers still need support prior to investment decision-making, due to the lack of financial literacy. While younger generations are more prone towards self-directed behaviors and self-learning, we found few age differences in Millennials and younger Customers of Z generation regarding need for investment decision-making help. 

In this context, Millennium bcp launched a new “one-time-advisory” service for affluent customers supported by a digital enabled platform that standardize the advisory approach across all relationship managers – which have upgraded their MiFID II certification for investment consulting – and that offers two customer-centric investment journeys: retirement planning & general investment. 

Through the combination of the investor’s profile, amount, time-horizon, and knowledge, we generate a recommendation of different investment products of the same risk-level (funds, certificates or insurance-based products). This journey is having excellent results on a customer’s confidence over investments, providing an uplift on investment product sales.

Three major enablers serve these two customer-centric investment services contributing towards a better experience for new generations: Omnichannel subscription journeys, a new customer servicing model, and CRM analytics. 

Given the ubiquity that new generations demand and our new retail distribution model, we rolled out features that allow relationship managers across all segments to generate investment product subscription to self-directed channels (app & website). 

New servicing models were implemented, namely full transparency on investment monitoring in the app, withdrawals, changing top-up scheduling scheme and, particularly important for new generations, a new customer investment engagement framework through push-notifications (e.g. stock dividends, end-of-maturity, subscription confirmation). 

Based on CRM analytics each service is targeted to a specific customer cluster through both traditional and digital marketing campaigns and lead generation to RMs. 

According to research by Accenture, the current wealth management advisory model is not working for women. Do you notice differences in terms of investment behavior by women compared to men? What are some examples? And how have you tailored your offerings to serve female Customers better?

A recent study[1] sponsored by the European Commission revealed that in Portugal, gender distribution is an important factor when looking into the propensity to invest. Considering the general distribution of men and women in Portugal, it was concluded that women are underrepresented in the securities market or as investors in general, albeit more women indicated that they make plans to manage their income and expenses and keep a note of their spending than men.

It was concluded that men seemed to be more risk prone compared to women and that for women, advice from the bank relationship manager or friends were more likely to convince them to invest. Women also indicated to be more uncomfortable in making investment decisions.

Considering the general gender distribution of Millennium bcp’s customer base, women are indeed underrepresented (-10 p.p. vs. total weight in customer base) when analyzing customers with at least 1 investment product. 

One should also contextualize these results on the overall Portuguese population household decision making process and income distribution. 62% of Millennium bcp’s accounts of customers who hold at least one investment product have at least two account holders. Research has shown that typically investment decisions are discussed jointly which make the call for joint marketing influence. 

We also found that women investors are also found to be more prone towards low risk products and retirement plans (funds or insurance).

Although one should recognize that additional efforts could be made to achieve better gender balance in investment, in recent customer research we found other factors that shape similar attitudes towards investment decision-making such as income, education, or even geography. 

Rather by gender, Millennium bcp is working on hyper-personalization of investment customer journeys by current and past investment experience – by differentiation of customer journeys – and lifecycle. 

Technology is being implemented to digitize almost every area of a bank, but advisory remains complex to automate. How is your bank approaching the integration of AI into its advisory services? Will it be a mix? Will the human touch always be required when it comes to wealth management?

Although new generations (Z and Millennials) are more digitally native, our data and research shows that when it comes to wealth management, in Portugal, there is still the need for support in some investment decisions. A call for a hybrid model is thus important, having not only human support optional features in investment digital & branch journeys but also AI-based guidance namely in self-directed channels. 

We see AI development on CRM models - to develop investment propensity models MiFID compliant, on hyper personalization of digital and branch investment journeys – ensuring different customer journeys for low-to-high investment experienced customers and even on advisory algorithms, ensuring mass personalization of advisory services. 

Regulation will play a particularly important role in defining the boundaries of the integration of AI in the retail investment business processes.

How do you see wealth management evolving in the next decade? (open banking, platformication, new players, new technologies…)

We see customer needs shifting away from portfolio construction to passive investment outcome-based planning. 

Data and analytics capabilities will play an important role in redefining new customer-centric investment journeys. Fast technological progress with RPA, machine-learning, AA and NPL will enable banks to deliver hyper-personalized advice across different channels, both digital and human based advice. 

Human advice will remain very important but new advice platforms will demand new skills from relationship managers. Goal-based advice will increase its importance, driving young customers’ investments. 

Some fintech verticals might become significant global players with cost-efficient strategies and customer centric early approaches with regulators insuring a level-playing field. Some integrated banking/wealth-management ecosystems could emerge from new open banking standards if EU regulation extends the level of data sharing for investment accounts.  

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[1] Financial literacy for investors in the securities market in Portugal (2020), European Commision, KPMG, Valdani Vicari & Associati 

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