The Pimfa Millennial Forum has recommended the wealth management industry offer differentiating services, such as a ‘property saver’ account, to attract millennial clients.
The Millennial Forum, set up by the Wealth Management Association prior to its recent merger with the Association of Professional Financial Advisers to create the Personal Investment Management & Financial Advice Association (Pimfa), looked at promotion of the wealth management industry.
In its second year, one of the Working Groups put forward the recommendation on the basis millennials have less wealth to invest and less loyalty to brands.
The members of the working group, now being developed by the Pimfa, also suggested firms provided an all-in fee structure to millennials, a low minimum investment requirement and fees tiered by age to help encourage the generation frequently referred to as millennials to invest.
Each of the four Millennial Forum Working Groups was tasked with researching an area of the industry – generational funds flow, cost and barriers, technology and data, and promotion – before presenting their findings and recommendations to an industry panel on 26 June.
Melissa Giordano, head of pensions and savings strategy at HM Treasury, who sat on the panel at the forum, explained millennials “have short-term priorities” which were “preventing [them] from accumulating savings”.
The working group for promotion of the industry surveyed 314 people, around 85 per cent of whom were in financial services.
In spite of this, their survey revealed 67 per cent of respondents across gender, income and profession said investment was not relevant to them.
When asked for words they associated with wealth management, the respondents used phrases including “out of touch”, “out of reach” and “expensive”, the panel was told.
Property ownership was cited as one of the barriers, with millennials choosing to set aside money for a deposit or mortgage repayments over investing their wealth.
The group pointed out millennials were not finding a link between their goal of home ownership and investing.
Philip Howell, chief executive at Rathbone Brothers, another of the industry panel members, agreed “property is the biggest threat to investment”.
Liz Field, chief executive of Pimfa, opened the forum by acknowledging how to attract millennial clients was “one of the main worries” for the industry.
As part of its recommendations, the costs and barriers working group said the regulator should encourage the wealth management industry to offer simplified services and warned there was a danger the industry would “fail to capture this generation”.
Several of the groups came to the conclusion millennial investors would prefer a combination of robo-advice and face-to-face advice.
The working group which presented its findings on technology and data said wealth management firms needed to incorporate “interactive technology” in order to attract millennial investors and recommended they partnered with early growth fintech firms to achieve this.
It also urged the industry to rank innovation alongside cybersecurity.
Ms Giordano, Ms Field and Mr Howell were joined on the panel by John Hughman, editor of FTAdviser's sister title Investors Chronicle, and Nicholas Johnson of Coutts & Co.
The final recommendations will be published and released at the Pimfa Summit in November this year.
eleanor.duncan@ft.com
