Baby Boomers have begun transferring an estimated $30 trillion of wealth to their millennial children or heirs, and this handover offers financial firms and their advisors the opportunity to serve this younger generation, already the nation’s largest. But to reach them, the financial industry must grasp that millennials grew up in a different world than their parents and even GenXers and they hold very different investment behaviors.
Financial advisors risk turning these millennials off if they fail to realize that this generation demands that their professional experiences reflect how they live their daily lives. And their lives revolve around consumer technology that, in its various channels, define practically everything they do.
If wealth firms want these “digital natives” to look to them for counsel, advisors must start speaking their language to earn their trust. They must personalize their experience, tailor their investment information and communications and offer collaboration tools. Among other things, they must understand that millennials favor social responsibility, are attracted to brand, will search for true value and will “click to buy” to act decisively.
The rewards are huge
The stakes are enormous because millennials – an estimated 83.1 million Americans born between 1981-1999 – are game changers. The technology they embrace goes way beyond a few smartphone apps and increasingly encompasses virtual reality, artificial intelligence, blockchain and real-time analytics that will only grow in impact.
They know more about investing than other generations. A survey by Broadridge Financial Solutions, which services the financial industry, and Roubini ThoughtLab, a thought-leadership consultancy, finds that millennials possess a better grasp of their financial goals, risks and costs and are more open to alternative investment options and ways to access them.
Nearly three in five say they won’t invest in something they don’t understand, and 78 percent intend to communicate face to face with an investment provider, although many millennials don’t think their providers are prepared to meet their expectations.
There’s no time to waste
For those and other reasons, wealth firms must move immediately to attract them and forego waiting to reach them until they accumulate more wealth. Why? Because 72 percent of them are inclined to switch providers if their expectations are unmet. At the same time, three in four believe working with a customer service advisory team will be important to them over the next five years and 39 percent even say they would pay extra for it.
How can wealth providers develop a “millennial-proof” strategy? It involves a fundamental shift in focus for firms that tend to be tradition-bound. They must revamp key aspects of their operations – from advisory approaches and product portfolios to business models, technology use and marketing plans.