The millennial community remains a key, yet somewhat mystifying target audience for investment managers and financial advisers globally. From attracting talent to acquiring and retaining customers, companies continue to ponder how to finesse their communications and messaging to attract this growing market segment, which boasts distinct concerns and interests to previous generations.
In the UK, squeezed by falling average wages, student debt, higher inflation and sky-rocketing real estate prices, many millennials are putting off saving and investing and opting to focus instead on immediate reward pursuits such as travelling, or getting their foot firmly on the property ladder after tapping the bank of mum and dad.
As the first generation set to earn less than their predecessors over the course of their working lives, the pressures on this generation have created a great deal of press coverage, and pose a conundrum for wealth managers.
In a bid to provide some answers, the Personal Investment Management and Financial Advice Association (Pimfa) recently wrapped up the research stage of its 2017 millennial forum with a presentation and a panel discussion with a group of key industry players in late June.
Each of the research groups, made of millennials working in the UK’s investment management and financial advice industry, surveyed around 350 people, around 85 per cent of whom were in financial services.
Supported by HM Treasury, the four working groups conducted primary research over the course of six months, covering topics including millennials and the promotion of the industry, barriers to entry, generational fund flows and the impact of technology.
Clearly, new initiatives that bring the industry closer to the millennial generation are of the essence, with 67 per cent of respondents surveyed across gender, income and profession saying that investment was “not relevant to them”.
Although the full report is due to be published later this autumn the initial findings provide an interesting insight into the kinds of issues the industry faces and some initiatives that could well gain traction in coming months.
Some of the key takeaways from the research groups call for an industry-wide drive to dial up its tech-based offering, enhancing usability and access while bolstering data protection.
Another interesting line of thought calls for the adoption of a long-term and holistic approach to this market segment, with millennials being recruited into a habit of saving and investing from an early age, and potentially encouraged to invest via their family links.
Specifically, one of the initiatives proposed was the launch of differentiating services, including for instance a specific ‘property saver’ account, structured broadly like an Isa designed to help millennials access their first home.
Millennials are often decried for their short-term views of the savings and investment cycle, with research noting that 66 per cent of respondents think a long-term horizon amounts to less than 10 years.
This is compounded with another finding that 71 per cent of survey participants said they would not allocate any money to their pensions if they received a £100,000 windfall.
For this cost-conscious generation, one research group called on the industry to be prepared to take on an initial loss to onboard clients at an early stage, developing client retention over a longer term horizon. Their proposal included lowering the minimum required investment thresholds, while adding fees tiered by age to help encourage millennials to step up their investment strategy.