Millennials and Technology are Shifting the Wealth-Management Landscape

The wealth-management industry has been undergoing a major shift due to demographic and cultural changes that can’t be ignored.

Financial services firms enjoy an overwhelming majority of their income — 80% — from their affluent customers, which means they tend to focus on their wealth-management offerings. It wasn’t always economical for advisors to spend time attracting young investors. Now, with more choices when it comes to financial advisement and younger high-net-worth individuals, wealth-management firms find themselves competing for the very demographic they historically ignored.

Millennials are about to become the largest generation, and the rapid changes in technology during their lifetimes have dramatically raised their expectations of wealth-management providers.

Here are six mentalities of Millennial investors today, and the implications for wealth-management firms:

Personalization is key

Investors don’t want general advice that anyone can find helpful, but want to know how the advice specifically relates to their circumstances. Firms must be much more targeted in the way they market to younger customers and keep the messaging personalized throughout their experience with advisors. For wealth-management firms, marketing automation and data analytics can be the key to connecting with younger investors with a more targeted message and call to action.

24/7 access

People constantly seek out advice on financial wellness, and in different places online. Millennials have had access to social media since their teen years and college, and are now using these sites for more than keeping up with friends and family. Social media is being used for customer service, online shopping and even financial advice. Millennials expect to have this access to expertise at their fingertips, without having to call or email a personal advisor.

No risk, all reward

Millennials were old enough to witness the unfortunate economic crisis of 2008. They’ve seen what financial hardship looks like on a national scale, and are more cautious entering their adult lives. According to a Deloitte study, young investors don’t view risk-taking as exciting and rewarding, but as a downside of investing.

This means that firms will now have to do more than diversify portfolios to navigate these risks. This group will rely more on strategies that give downside protection and highlight capital markets.

Seeks advice from inner circles

One characteristic of the young, affluent investor we are seeing today is that they want to be in control of their finances, and feel as though they are making their own decisions. Millennial investors are looking for advice from their friends, colleagues and family.

Younger investors are thinking differently than past generations about advice from an advisor; while 62% of Boomers rely on an advisor, only 39% of Millennials do so. So, firms will have to try harder to retain their client base and keep the assets of each family while they are being passed from generation to generation.

Independent researchers

In addition to seeking advice from their inner circles, Millennials are conducting their own research on what’s best for them financially. We know that Millennials are spending their money very differently than past generations, but they are also learning on their own what’s worth their money and what isn’t. They are less trusting of authoritative voices in the industry, and are leading their own research on matters such as finance.

Since young adults are living with different financial hardships than older generations, due to the rising cost of living and education, they need to know that their lifestyle is understood. According to a study by Bank of America, Millennials are learning to be financially responsible at a faster rate than older generations ever were.

Be treated equal to older investors

You can’t treat Millennial clients like second-class citizens. Since younger investors aren’t on most financial advisors’ radar, they often don’t get the same treatment as older investors who may have more assets. But Millennials aren’t looking to be treated any differently than Baby Boomer and Gen X clients. They want access to the same information and strategies as older investors.

The financial services industry is experiencing a couple of changes simultaneously. There is currently a shortage of advisors compared to the rising number of investors looking for their services. Wealth- management firms are struggling to maintain family assets as new generations gain inheritance, and their advisors begin to retire. Also, younger investors have an entirely different outlook on how wealth-management services should be delivered, requiring firms to rethink strategies and how they use technology.

Luckily, financial service firms are putting emphasis on their wealth-management offerings, because it’ll take quite the investment to keep up with the latest trends and find talent to cater to potential clients. Millennials aren’t looking to lose control of their financial decisions, but rather to find an abundance of resources to support them.


What does this mean for you?

Product mix, channel, and message have always been critical to success. Understanding the target audience and their motivators and current mindset is necessary to connect with a prospect and turn them into a client. Financial organizations are no exception to these basic tenets, so applying these insights to marketing strategies will help to build relationships with Millennial targets.