An opportunity for wealth managers to better service millennials
Fear of Missing Out, aka FOMO, is a constant in life for millennials. Several social media platforms provide a steady stream of proof that other people are out there, doing fun things that they’re not. But does this apply to investing? Do millennials feel like they are not being serviced according to their needs and preferences? For what we know, this seems to be the case.
According to a Deloitte study on wealth management and millennials, nearly six in ten people of this generation would change his or her bank relationship for a better technology platform solution. In a different report, by Telstra, researchers found that 67 per cent of this generation prefer to receive advice on financial products and services via a digital platform.
Taken together, these two statistics provide two important insights for wealth management services in Australia: One, there’s a big gap in the market at the moment to service the needs of millennials and, two, there’s an appetite for digital engagement coming from the same group.
Why the appetite? Older generations often want to ‘eyeball’ the person they’re handing their savings to in order to build trust. But if you’ve ever dealt with anyone under 35, you’d know their preference for texting rather than actual phone calls – so a face-to-face meeting is probably not appealing.
Having grown up handing over their data, photos and friendships to digital companies, millennials don’t need to shake your hand to feel a level of trust.
Why the gap? For most wealth managers, the numbers don’t stack up. With only a small amount to invest (compared to their parents’ generation), the potential revenue from millennials doesn’t make the cost-per-acquisition worth it.
Moreover, convincing millennials to part with thousands of dollars for advice is a challenge, when more than two in three don’t own their home and are struggling to save for a deposit.
This hardly comes as a surprise, considering the limited opportunities this generation has to invest beyond a savings account. Minimum investments and management fees are generally too high for them. Plus, the ‘one size fits all’ products hardly ever adapt to their reality.
What’s the solution? In a market where many competitors have left millennials in the too-hard (or too-poor) basket, progressive wealth managers have an opportunity to stake their claim.
Quantifeed’s B2B wealth management technology helps banks, brokers and wealth managers target the burgeoning mass-affluent market of millennials, providing the best possible solutions in a scalable, lower-cost model, so that the numbers do stack up.
With a combination of low-cost quantitative portfolios, a goal-based investment approach and engagement technology, Quantifeed is helping financial institutions across Asia-Pacific to better service this market segment. Millennials now have an opportunity to invest in a range of assets that may speed up their saving for a home deposit.
To seize the opportunity, here are a couple of ways wealth managers in Australia can ride the coming wave of millennial wealth:
1. Look at the long game – While millennials are struggling to balance their savings, side-hustles and smashed avocado today, that won’t always be the case. By 2020, their wealth is expected to double from present levels across the globe. Digital advice allows wealth managers to start building relationships with customers today, rather than try to win their trust once their wealth has increased.
2. Focus on the user experience – Clunky design and websites that don’t work on mobiles are the fastest way to turn off younger investors. Nine out of ten millennials check their smartphone as soon as they wake up, so it’s crucial to design your platform functionality with a tiny screen in mind. These types of decisions are where many financial service providers come unstuck, and it’s why we have built our business on providing highly configurable mobile friendly white-label technology – ensuring a rich user-experience no matter whether your platform is used on a smart phone, tablet or desktop computer.
If you’re in an Australian financial institution looking to build an engaging robo-advice offering for your customers, let’s meet! You can contact me on email@example.com.