Investments  

Millennials prefer holistic advice

But the key differentiator for younger investors is surely that they face far greater financial challenges than may have been the case for preceding generations.

Younger investors need to prioritise repaying their student loans, saving for a deposit on a home and investing for retirement and the expenses of later life, almost certainly without the security of a defined benefit pension to look forward to. 

Although younger investors may demonstrate different behaviours in the way they consume advice, their underlying needs are not dissimilar from young people in preceding generations.

It would also be a mistake to think of them as one unified group. The millennial generation is arguably the most diverse to date and, spanning 15 years, their needs as investors will likely differ greatly within the cohort. 

Millennials and Generation Z are a significant demographic, outnumbering baby boomers and Generation X combined.

Given their financial challenges, they potentially represent an enormous opportunity. One natural way to engage with the younger generation is as the heirs of existing clients. However, studies suggest the majority of advisers are not doing this. 

The benefits of doing so are clear. Building relationships with clients’ children lessens the cost of acquiring business, helping save on time invested up front.

Furthermore, our survey results suggest this could increase the likelihood of successful referrals: 77 per cent of the investors under 40 who selected their adviser based on personal recommendation did so because it came from a family member or a friend. 

The human element 

It is evident from our survey that younger investors value the more holistic – and, crucially, more human – elements of the adviser-client relationship.

These are the very elements of advice that are least susceptible to automation. While younger investors’ openness to automated advice services may suggest a longer-term strategic threat, we strongly believe the model of advice with a human element will remain predominant.

Key Points

  • Younger investors place more importance on human contact
  • Younger investors face greater financial challenges than older investors
  • They are best served with a combination of digital service and human interaction

These ‘digital natives’ are likely best served through a combination of digital means and good old-fashioned human interaction. In fact, we expect to see greater variety of advice models combining both elements, to best suit the preferences of each individual investor. 

By leveraging technology, you can reduce costs, speed up your processes and streamline some of the key services you offer, such as portfolio management.

This frees up time to tailor your business to the unique needs of each client.

So while digitalisation may be the driving force behind some of the competitive pressures we see in the advice industry today, it may also be the solution for future-proofing your practice.

So go ahead, use that app to order your next coffee. You might be surprised how powerful an ally technology can be.