According to a new Report from Forrester Research, Inc. (Nasdaq: FORR), financial services firms’ prospects are clouded by a new breed of Net-empowered consumers who don’t value the traditional service provided by today’s leaders. Financial firms will have to expand beyond their existing organizations to create autonomous subsidiaries, make acquisitions, or find partners willing to share risk.

“Today’s younger consumers are tomorrow’s affluent customers and the future of financial institutions,” said Jaime Punishill, analyst in Online Financial Services Research. “They are better informed, more self-sufficient, and want to take an active role in their investing and insurance decisions. The Net generation has internalized the new rules of the Internet, where building trust doesn’t require face-to-face interaction.”

To meet the changing expectations of these attractive customer segments, financial firms must undercut productive channels, products, and organizations — a process Forrester Research calls “proactive destruction.” This practice requires financial institutions to anticipate demand before new competitors capture the emerging market.

Because financial services is one of a few industries at ground zero for Internet commerce, firms are wisest to make the most aggressive response to the Net: Create an independent subsidiary unconstrained by the bureaucracy and central process of the existing organization. Carefully chosen leaders, creative compensation packages, and a business model that complements the strengths of the parent company will enable an independent subsidiary to succeed.

Financial institutions that are laggards in technology adoptions and business design will have to trade their cash for time by acquiring smaller firms. Smart firms will recognize the high cost of waiting and will pay higher prices in order to bring new business models to fruition. The new acquisition will benefit by piggybacking on the brick-and-mortar assets and marketing efforts of the parent company while maintaining its own identity and standards.

Executives who face insurmountable channel conflict or who have not embraced the Net can’t justify an independent subsidiary or acquisition. They can practice proactive destruction by taking a minority stake in a publicly traded company or partnering with a venture capital firm, which reduces the necessary capital investment and provides much needed outside expertise.

“Firms that dip their toes slowly into Internet waters are doomed, because the Net crowns winners more quickly than the offline world,” added Punishill.