I was born in October 1983, which categorizes me as a relatively older Millennial, as Millennials are defined as those born between the early 1980s and the early 2000s. The majority of my colleagues and friends are Millennials, so when I log into Facebook, Twitter, or LinkedIn, I often see these people sharing articles like “Millennials are killing chains like Buffalo Wild Wings and Applebee's”, articles about how Millennials are killing the diamond industry, and even articles about how Millennials are ruining the bar soap industry.
The financial services industry is no exception to this with the assumption that Millennials are ruining the industry. Whether it is banking, wealth management, or any other number of financial service solution providers, Millennials are seen as underutilizing these services.
Assessing your business model
It is not Millennials that are the problem for these businesses and services, it is the business model of the businesses themselves. We live in a capitalist society, which means that only those businesses that can provide services that are useful in the market can survive. If these business models are not being adopted it is not the fault of Millennials; it is the fault of the businesses for not appropriately targeting and approaching that Millennial demographic.
This is extremely pertinent in the financial services industry, and many firms want to engage with this demographic group but are not properly equipped to make a meaningful connection. Oftentimes, these entities try to use memes or other strategies to connect with Millennials – the most famous being Hillary Clinton’s famous tweet about student loan debt.
Targeting Millennials
The aforementioned types of failed attempts of appealing to Millennials ultimately lead to disenchantment amongst that group. However, there are some things to take into consideration before a firm starts to target this demographic group:
- Stop thinking of this group as Millennials. They want the same thing as any other client: sound, reliable financial advice. According to the Corporate Insight 2016 DC Plan Participant Survey, almost the same amount of Millennials, Generation Xers, and Baby Boomers want to play an active role in managing their retirement strategies, but want professional help.
- It’s not just this group that demands a digital focus: according to a study by PWC, over two-thirds of high-net-worth clients use online and mobile banking services and over 40 percent use online tools for portfolio review and management. These clients are starting to view digital as an essential factor in their financial lives.
- Those firms and advisors who adopt such technology discover that they not only have a higher number of millionaire clients (35 percent who leverage tech vs 28 percent who do not), but they also have a median AUM that is nearly 40 percent higher than those who do not.
When advisors and firms speak about servicing Millennials, what they should be speaking of is how to serve both their accumulating clients, their affluent clients, and their high-net-worth clients in a scalable fashion using digital engagement; in fact, many of these firms are doing so.
According to a study by Salesforce, number of firms looking to provide online financial planning simulation tools is looking to expand by over five times the current amount by 2019. That same study goes to show that a significant percentage of firms are also looking to deliver similar offerings on mobile in the next two years.
Shifting your focus
At the end of the day, it does not make sense for financial firms to dedicate so much time focusing on Millennials, as that is only part of the demographic they want to serve. They will need to focus on making their offering more scalable for those who might not otherwise be able to access advice. If these firms want to remain competitive in the marketplace, that means delivering an easy to use digital experience for anyone, from an ultra-high-net-worth individual to a new wealth accumulator client.
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