Don't forget Generation X

Alex Kerry

Alex Kerry

What can be disrupted will be disrupted. This is the universal law of innovation and it is a concept the financial services industry will have to embrace as technology transforms the saving landscape. 

Over the past decade, the industry has undergone profound regulatory change and has to reconsider its relationships with investors.

There has been a realisation the industry needs to engage with consumers in a way that delivers more clarity on products and services. Consumers also need to believe their wants and needs are being addressed. 

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Against this shifting landscape, I assess the five key trends that adviser platforms, wealth managers and financial advisers need to consider. 

Improving customer experience

When we consider customer experience, it is important all segments of the market are represented. While millennials are seen as the first tech-savvy generation, we must not forget about the under-served Generation X.

Like millennials, Generation X prefers mobile and digital interaction and is comfortable transacting online. These people will increasingly also look to interact with financial advisers in this way. 

According to Ofcom, internet use among adults in the UK aged 16 and above is 87 per cent, with the time spent on the internet increasing every year. While computer internet consumption has been falling, internet ‘on the go’ usage is also growing each year.

The most popular internet activity is sending and receiving emails, followed by information on goods and services – of which the highest numbers of users are between the age of 35 and 44, or Generation X.

While this generation has the ability and capacity to invest, a large proportion of this segment does not invest, or keeps money in cash-based products. According to HMRC, about 80 per cent of Isa subscriptions remain into cash, despite today’s incredibly low interest rates.

Research suggests the real key to engaging the Generation X audience and new investors is through enhanced customer experiences. We have already seen the emergence of ground-breaking new digital investment solutions such as Wealthify, Scalable and Moo.la, but the revolution is only just beginning.

Portable data

Poor access to financial data impedes a consumer’s ability to make informed decisions. It also makes the process of providing advice more laborious, as advisers need to spend large amounts of time compiling data from pension providers and other institutions.

The Treasury has announced the Pensions Dashboard prototype will be ready by spring 2017, with an official projected launch in 2019. However, we believe the industry will begin to bring its own data capture solutions to the table. 

Another exciting development is the integration of spending habits data into individual saving plans. This is vital in achieving dynamic saving flight plans to long-term saving.

As savers go through life, changes in spending habits, behaviours and milestones – such as having dependents – must be incorporated into savings plans. This information can also be used to create saving nudges to increase the level of defined contribution or ISA saving, and adjust overspending, so savers can achieve their financial goals.