You can read ‘Part I’ here
Millennials (born between early 80’s and late 90’s) are entering the most dynamic phase of their adult lives, made of earnings, consumption and investing. More than half plan to start new businesses, whilst more than a quarter already have one. Moreover, to a degree unprecedented in history, they will be inheriting massive wealth from their baby boomer parents.
Figures speak for themselves. Millennials are already making up 23% of the world’s millionaires* and they are also expected to receive a record-breaking intergenerational wealth transfer of $30 trillion – that means more than half of all investable assets – over the next few decades.**
Wealth management companies and financial services providers should look at these two macro-groups – entrepreneurs and inheritors – in order to win new business. Engaging this new generation of clients will be crucial to the success of each business but understanding their financial attitudes may be difficult whilst satisfying them may be even harder.
In fact, Millennials are coming with documented differences in the way they think about money and will be taking a different approach to managing their money from previous generations. Despite younger generations are typically perceived as more comfortable accepting a higher level of risk, Millennials tend to prefer a more cautious approach when it comes to money matters, and with reason. Terrorism and financial crises have occupied a large part of their lives, financial hurdles such as high property prices and less lucrative retirement benefits complete the picture.
Given what appears to be a generational predisposition toward caution, trust will be an essential quality in millennial relationships with their wealth management advisor and financial services firm. The capacity for building trust beyond conventional fiduciary obligations will require formation of authentic personal relationships different, perhaps, from the established conventions of what previous generations have learned to think of professionalism. Millennials expect functionality as a norm, not as an exception. Functionality is the sum of what a product or a service can do for a user – it extends to the newest technologies, company responsiveness, flexibility in approach, innovation, clarity on a service offered and associated fees.
The implication for wealth management companies is that they will need to simultaneously build relationships and think in innovative ways about products and approach. What next?
Of course, working on different fronts will be imperative.
- Redefining the role as advisor
The recent PIMFA Millennial Report 2017 shows that two thirds of respondents have very little knowledge of the wealth management industry, however more than half would be happy to contact a wealth manager or financial services firm in order to discuss their venture. The report underlines the fact that many Millennials are unclear on the services offered by professional firms and point to the need for clarity on value for money relative to different levels of service.
So what can a wealth management company do? Become a co-creator, a resource and an educator. Work with Millennials rather than for them. Make them feel like they’re on the same team.
- Innovating services and offering
A “one-size-fits-all” solution may not get a Millennial excited. As a mission-driven generation, they place value on having purpose and meaning. And that’s not all; 91% of Millennials would use a social network to obtain opinions or commentary about different offerings, 81% of Millennials say they would turn to a social network for reviews about financial products and services.*
So what a financial services provider can do? Innovate the offering introducing new range of services. Find out what drives each Millennial client, what they are passionate about and what they are looking for. Prepare a new set of questions and make it personal.Be prepared to discuss unique, purpose-driven solutions that may fit new requirements.
- Rethinking communication
Digital natives, Millennials are not merely comfortable with technology, they assume technology. Using technology in communication has indeed become a necessity – Millennials communicate through emails, mobile phones, texting services; they like video conferences, video chat rooms and social media channels. As time goes on, more emerging technologies will change the way people communicate and it will be up to each company to embrace them or not.
So what can wealth management companies do? Use technology in communication. Take a long, hard look at the communications they are sending out. Multi-page printed newsletters? Gone. Lengthy quarterly letters? Goodbye. Content needs to be engaging and bite-sized.
Review resource materials and ask: Are they visual? Easily digestible? Available electronically?
- Working on online presence
Social media is an ideal channel to connect with Millennials by staying relevant, sharing educational advice, and engaging in personalized connections. Financial firms will need to embrace social media as an integral ingredient in their overall millennial marketing mix. Millennials turn to social networks to get advice and recommendations from their peers, visit a financial company’s social pages, and look for educational content to make decisions.
So what can a financial services provider do? Be online or risk being irrelevant. Updating online presence is a must as the first thing any Millennials will do is to research the company name on Google.
LinkedIn and company website are the first places to start. Refresh everything —update website and page consistently, be concise and clear, share interesting articles, and join relevant groups. Above all, embrace storytelling, tell the company story, its origins, its mission, vision and values, explain why and how, inform. Be personable.
“Intelligence is the ability to adapt to change.” (Stephen Hawking)
Written by Marta Bellamoli, Marketing Co-ordinator
* source: Forbes
** source: PWC survey