CTO Insights

Lifting the lid on digital Millennial wealth management

Millennial investor on her mobile.

Having grown up in a time of rapid change and lived through two financial crises, Millennials’ wealth management priorities and expectations are vastly different from generations before them. By 2025, Millennials will make up three-quarters of the workforce. The Covid-19 pandemic has forced Millennials, many of whom lost their jobs or took a pay cut, to rethink their financial situations and start investing and saving more heavily.

As wealth providers turn their attention towards attracting and retaining this emerging generation, one question is at the top of strategists minds: what do Millennials want out of their investment experience? If the record growth numbers for retail-focused fintech platforms are anything to go by, then providers need to address four key things: sustainability, goals-based tracking, education and digital experiences.

The feel-good, do-good factor

A report by Morgan Stanley’s Institute for Sustainable Investing found that 86% of Millennials are interested in sustainable investing. Whether it’s having a positive effect on people and the environment, or even choosing funds or companies that generate market-rate financial returns, Millennials want their investments to have a positive effect on the world at large.

The number of sustainable funds continues to grow. Morningstar reported that there was a 21% increase in retail assets invested in sustainable investments in Australia, reflecting the growing desire from investors for sustainability in the wealth management space.

This growing desire has also fuelled the need for more transparency around portfolio holdings data. Having grown up with technology and the internet, Millennials expect transparency and accessibility to information around their investments. Interactive fintech tools can support this through visual graphics and updates about fund performance. The use of strong imagery and contextual stories will help to reinforce the positive impact of their investments, which will help to build loyalty and improve customer retention.

Tangible, goals-based tracking

The latest findings from the Global Investor Behaviours and Attitudes whitepaper from Calastone indicates that Millennials are primarily saving and investing for their first or new home (51%) and travel (45%). In the same report, 44% indicated that having better visibility over their money and investments would encourage them to invest more.

In this age of instant gratification, modern investors want to interact and monitor their investments in real-time across any device. The outdated practice of quarterly reports will fall short of investors’ expectations. Digital tools that allow investors to track their investments with automated alerts when certain milestones are achieved is crucial to assist the next generation to stay on track.

Millennials are the first generation to have KiwiSaver for the entire duration of their working careers. By leveraging engaging digital tools, providers have a huge opportunity to build long-lasting relationships with investors. During times of market unrest (like what we witnessed during the initial period of Covid-19), KiwiSaver providers and fund managers can minimise switching panic and better educate investors to stick to their investment plans.

Education, information and better accessibility

Retail-focused fintech platforms make it their sole mission to democratise the investment sector and provide the ease-of-use, instant access and cost and information transparency younger generations demand.

On the flip side, these apps have given rise to a new level of misinformation: an opening up of Pandora’s box in the investment world. Through social media, some retail investors are sharing their advice, trading wins and losses as well as teaching investment terminology. The scary reality is this: many of these #fintok and #fintweet sensations have enormous social influence, but do not hold the relevant qualifications to be dishing out this type of information. This misinformation is being fed to a largely inexperienced audience, which is a big concern for the financial welfare of the next generation.

With only 38% of Millennials indicating that they have a good understanding of investing, there is a critical need to provide better education and access to investment resources and practical information from reliable sources. According to the recent Accenture report, just over two-thirds of millennials indicate that they want gamification to help them learn and engage with their portfolios more.

These figures indicate that the next generation of investors wants to be more actively involved and knowledgeable around their investments. There is a massive opportunity for providers who embrace the fintech model to support Millennial wealth management by driving engagement through better education and access.

Frictionless digital experience

An easy-to-use online interface is no longer a nice-to-have but is expected. Millennials have a preference for technology-based interactions, with over 60% wanting a self-directed investor portal and a mobile platform as a standard offering with their wealth providers.

Millennials are by far the most engaged demographic, with 73% checking their investments either weekly or monthly. Bigtech firms have set the standard of digital user experiences, and wealth providers need to follow suit. Whether it’s seeking out advice, checking investments or engaging with providers, Millennials want to be the drivers of their own digital experiences to reduce as much friction as possible.

Automation and self-functionality will be key drivers of Millennial wealth acquisition in the future, as they want to have more control over investment processes. This level of automation will force wealth providers to reevaluate their business models and offer value in other ways.

Customisation and personalisation will drive loyalty. Over half of Millennials want to be able to customise the look and feel of their apps and would prefer tailored educational and investment material. Convenience is the name of the game, and providers would be wise to embrace automation and leverage customer data to create unique, slick user experiences to drive better financial outcomes for this group.

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in CTO Insights