Millennials will represent the largest adult segment since the Baby Boomer generation and are expected to inherit over $40 Trillion in assets. If you’re in the wealth management industry, let me repeat that. Baby Boomers will be transferring $40 trillion in wealth to Millennials in the coming decades. However, the severe volatility and crash of the market have left Gen Y with little to write home about. Wealth managers will need to pivot significantly from their old ways of marketing and the ways in which they interact with clients to tap into and serve the next generation of entrepreneurs and investors.
Let’s start here → Millennials describes anyone born after 1980 who reached adulthood with the turn of the 21st century. At the time of this article, those 18 - 35 years old. Millennials represent the largest adult segment who are currently reaching the prime of their earning years.
Why this matters → Millennials, over the next 3 years, are predicted to double their net worth to an estimated $20 - 25 trillion. In the prime of their early 20’s and 30’s, they are certainly still in wealth creation mode.
Millennial trends: wealth acquisition & allocation
66% of wealth managers’ clients are currently 60+ years of age. With Millennials expected to inherit $40 Trillion over the next 10 years, financial planners and advisors need to understand that their clientele will shift over the next decade and therefore need to be diligent to understand and prepare for the new wave of tech-savvy Gen Y clients.
While Boomers have traditionally valued good pay for an honest day of hard work, 59% of Millennials have started or plan to start their own business - and 27% are already self-employed. This focus on self-growth and entrepreneurship extends to the trends of Millennial spending habits as well.
75% of Millennials want to remain authentic and value brands and employers that value social responsibility. 66% of Millennials feel responsible for the state of the world as well as obligated to help change things for the better. Wealth advisors should reflect on how their brand is received and ensure that their values are in line with those respected by this next generation of socially responsible clientele.
Financial Advisors: The challenges of reaching Millennials
As indicated by their generational name, “Millennials” are those who become adults around the turn of the century. This generation also marks a very significant evolution of technology. These adults were the first to grow up with home computers, cell phones and answers to virtually any question at the click of a Google search. Consequently, Millennials consider technology and internet / cloud-based platforms to be a standard rather than a luxury. 57% percent of Millennials reported that they would change banks for better technological offerings. 89% of those with smartphones report that they check their phones within 15 minutes of waking up (usually to browse social media). This will present a huge shift in the way financial advice and information is received and will prove to be the biggest hurdle wealth managers will face in securing new Generation Y clients but there is no doubt that firms need to start to transition to a digital operating mode.
"89% of those with smartphones report that they check their phones within 15 minutes of waking up (usually to browse social media)."
Additionally, the recent financial crises witnessed by this generation has created a distrust of financial security and institutions. Wealth managers need to be mindful of the cautious nature of Millennials when it pertains to financial matters and take care to nurture the relationship by educating their clients on financial terminology and products in a simple and transparent language (be mindful that advice will be cross-checked with Google searches and close friends and family).
This blog is meant to underscore the challenges of reaching Millennials clients as well as highlight important trends for asset managers and financial planners to encourage early adopters new technique early to enable them to gain new business and gain market share. If you are a financial planner, advisor or CPA and want to understand how to connect with a new audience through online platforms and social media, Sprout Digital is a full-service digital marketing shop that can consult your firm on how to reach the next wave of clientele.