The term millennials is used to describe those born between 1980 and 2000. Millennials are currently the largest adult segment in the population – and as baby boomers (those born between 1946 and 1965) enter retirement, millennials will also soon be one of the wealthiest, too. In fact, Deloitte predicts that from 2015 to 2020, their aggregated net worth will have more than doubled. Why? Well, firstly, millennials are currently entering their prime earning years. By 2025, they will comprise three-quarters of the workforce – and in addition, they also have the prospect of large inheritance, too.
As millennials become a larger client group for the financial advice and wealth management industries, it’s essential that financial advisory firms are ready and able to serve them. Until now, the financial advice industry has been used to providing for a customer base with an entirely different set of needs and expectations. But millennials are a completely different entity. So how will this all impact the financial advice industry and the role of the financial adviser in the next decade? Read on to find out.
Wealth management meets the millennials
Generally speaking, millennials are technologically savvy, more cautious and less trusting than their predecessors. They also want more personalised services, more transparency and more control. Yes, they are currently entering their prime earning years – but millennials have completely different aspirations than other generations. For millennials, self-employed entrepreneurs are a key role model. In fact, 54% of millennials plan to start their own business, whereas 27% are already self-employed.
This means that – despite their reputation – millennials are disciplined, eager to make sacrifices and set ambitious goals for their lives. 72% agree that the sacrifices they make now will pay off in the future, whereas only about half of all other groups agreed with this perspective. They are hungry for information and want to make a difference – and as they take to the centre of the financial stage, it’s time for financial advisers to start focussing on them. Here’s how millennials will shape the role of the financial adviser in the coming years…
Values will become more important
Millennials are more focused on family and personal values than previous generations. They are more authentic and much more socially conscious, with 84% of millennials being interested in sustainable investing. As a result, they are less likely to put their ethics to one side in pursuit of financial growth. Instead, they want investment opportunities that don’t contradict their social, environmental and political beliefs.
Two-thirds of millennials are concerned by the state of the world and feel obliged to change something. They also don’t consider money as a sole success factor – instead, they give more value to brands and employers who act in a socially responsible manner. In fact, 29% of investors in their 20s and 30s seek a financial adviser that provides values-based investing, which means that when dealing with millennials, financial advisers will need to offer customised advice and keep individual needs and values in mind at all times.
Technology will be essential
As digital natives, millennials are the first generation to grow up with the internet and social media. Almost 90% of millennials check their smartphone within 15 minutes of waking – and their unique relationship with technology means they consider technology and online platforms an important aspect of financial advice. Basically, if you want to appeal to millennials, you need to be digitally savvy. It’s no wonder that robo advisers are on the rise!
Modern, forward-thinking advice firms will need to have the technology to deliver state of the art digital experiences to millennial customers in the next decade as the role of the financial adviser continues to shift. This will ensure that both clients and advisers have access to real-time information on any platform, wherever they are, staying in line with millennials’ on-the-go nature and keeping up with their unique relationship with the internet.
They’ll need reassurance
Millennials grew up during the financial crash – and the volatility of the markets has led to a state of distrust towards financial institutions. They were highly influenced by the financial crisis and they tend to be cautious and conservative when it comes to financial matters, so it’s absolutely essential that financial advisers worked hard to earn their trust. Simplicity is important, too: due to their lack of trust, millennials don’t tend to invest in stocks as much as previous generations, instead preferring physical assets and cash. They want simple, clear, straightforward products that are easy to understand.
84% of millennials seek financial advice showing that despite distrust of advisers and financial institutions, the need for investment advice is still huge. And interestingly, regardless of their love of technology, millennials will usually seek this reassurance and advice face to face. In fact, 82% of millennials would appreciate more personal meetings with their advisers. So despite technology and the rise of robo advisers, there will always be a need for that human touch.
An online presence is vital
Millennials will always consult peers and the media before acting on adviser recommendations. As a result, word-of-mouth and personal recommendations are a significant influencer for this generation. It goes back to their mistrust of the financial industry: they will always cross-check advice with external sources and always check online, so it’s important for financial advisers working with millennials to have a strong online presence, a good website and plenty of referrals.
Social networks are an absolute must-have as well. Millennials are especially likely to seek relevant content from financial companies on social media. In addition, because they are hungry to learn more, they will also appreciate things such as peer opinions and expert commentary on personal finances – it’s about building trust and seeking reassurance from their advisers. In fact, over half of millennials actively seek financial content from companies on social media – so if you want to appeal to the millennial market, you need to get online.
Are you ready for the millennial moment?
When it comes to the future of financial advice and the changing role of the financial adviser, it’s all about taking a holistic approach and combining a variety of methods to offer financial advice solutions that work for the investors of tomorrow. Despite millennials’ love of technology, nothing substitutes the personal interaction that comes with financial advice – so forward-thinking advisers need to deliver hybrid advice models that give the best of both worlds. This way, technology can be used to make faster, more informed decisions, but there will also be the reassurance, security and experience that can only be provided by a human adviser. If you want to find out more about the impact of millennials on the financial advice industry or if you are looking to expand your team and recruit the talent of the future, contact Recruit UK today.