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Nordea: Service, digitalization, and ESG for the next generation of affluent customers 25 January 2022

Ninni Franceschi, Head of Wealth Management Sweden at Nordea, discusses the changing nature of wealth management and what her bank is doing to stay ahead of the curve. 

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?

First, we of course always attempt to serve and advise the whole family including the next generation e.g. the future heirs – but treat them independently and according to their individual wishes as well as in a prudent and confidential way. This gives us a great chance to prepare heirs  for the future responsibility as well as build the needed relationship and trust required. However, we do see potential improvement here – the landscape has changed significantly; some heirs are more into digital and do-it-yourself. That is why we invest significantly in digital development to stay relevant for changing needs and behaviors over time. ESG is also very important for most heirs; an increasing demand for moving wealth into ESG as well as demand for ESG portfolio analysis and reporting. At Nordea we have broad ESG expertise to support our customers. Sustainability is embedded across Nordea’s business strategy, backed by measurable targets, strong governance, and one of the broadest sustainability offerings in the market.

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

It is of course included in the financial advice to some extent. The time perspective on the assets and its purpose (preserve wealth or grow, etc.) is an obvious part. Yet, inheritance is also a much broader matter – and also a matter of the heart. It encompasses all property and very often there is a link to the family business and how to bring the next generation into the business as well as how to protect the heirs – and the wealth. I would say we have a very interesting blend of business and family law advisory – and it is normally an ongoing dialogue over time when we are close to a family.

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

The climate impact as well as environmental engagement is significantly different. Millennials are putting sustainability first to a very large extent and expect the investments to also support the UN sustainable development goals, for example. This trend has been emerging over time. Nordea has a long and solid background working with sustainable investments via our asset management business. However, recently we do see a clear shift in preferences. In addition, millennials’ demand for relevant, digital communication and solutions such as reporting, market information and trading functionality is also very high. The pandemic has accelerated these trends. Nordea has made large investments in digital solutions in recent years, which is why we could seamlessly switch to online meeting solutions during the pandemic.

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

The offer is to a large extent tailor-made depending on the customer need – but naturally we have a set of components, products, and solutions to choose from. We are investing more in digital and frequent communication, yet staying personal and cultivating the personal relationship. We are also focused on delivering strong ESG discretionary solutions, as well as keeping high service levels. The digital era brings less patience with response times. Service, digitalization, and ESG are the main components – as well as a more profound interest for private market investments (but not only  to the younger generations).

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 clients better?

The trend is shifting towards us gradually having more female investors and customers; thus, we also naturally need more female investment professionals and private bankers as well as other specialists to meet the female customers’ preferences. Back in the day, I believe the sector was predominately populated by males – as investment managers and advisors but also from a customer perspective.

Today, we see emerging wealth creation by female entrepreneurs and business owners as well as  among heirs. From my point of view, the risk tolerance and interest for investing is not lower among female customers. However, knowledge is key for all customers, regardless of gender. Thus, we spend time in various shapes and forms to elevate customers’ knowledge. We also interact via networking events for female investors, business owners etc. to create arenas to encourage both the interest in investing – but also to have a dialogue on topics like entrepreneurship, venture capital, etc. We are also very mindful in having a diversified work force e.g. private bankers and lawyers from both genders, to reflect changes in society and thus the customer base over time.

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?

We offer some digitized advisory services today in self-service for less complex savings needs. In wealth management, we continuously seek to automate and utilize technology to support advisory services and to enable financial planning, portfolio analysis, etc. but the tools are still to a large extent utilized by advisors in dialogue with the customer. We believe we will have a more digitized and AI- supported wealth business over time, but still anchored with strong personal relationships as wealth management is more than mere risk/return and tax calculations. 

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

Full service wealth management will always require strong personal relationships, but we will see a rapid development in supporting tools and technology including better usage of AI to deliver a much better omnichannel experience for customers. I also believe smaller players and family offices will partner up with larger ones/banks and their wealth management divisions to enable a full service offering in an omnichannel setting. I believe transparency and openness will be a key driver; from smaller and larger players I believe we will see enhanced willingness to partner up to serve customers’ evolving needs and preferences. Naturally, pure digital servicing and online solutions will continue to gain ground in wealth management as well as in banking overall. The less complex needs can be met and be relevant without human interaction.

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Keywords

Affluent/Private

Geography

Sweden

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