One of the biggest challenges for wealth managers is to make sure they engage with the younger generation. It can be dangerous to make sweeping assumptions about what “Millennials” want or expect in the world of finance.

One of the biggest challenges for wealth managers is to make sure they engage with the younger generation. It can be dangerous to make sweeping assumptions about what “Millennials” want or expect in the world of finance. In this article, Cheryl Nash, president, investment services, at Fiserv, the financial technology solutions company, examines the issues. This news service is very pleased to share her insights and invites readers to respond. As ever, this publication doesn’t necessarily agree with all the views expressed by guest contributors.

Millennials represent a generational group whose use of technology is unprecedented, and many of these forward-thinking individuals have great ambitions for the future. Millennials, born between the early 1980s and 2000s, have been dubbed “The Me Generation” by critics, but financial advisors should look beyond this blurred assumption and embrace this group as a promising segment to serve.

Unfortunately, there appears to be a disconnect between financial advisors and Millennials, which is highlighted in a 2013 Merrill Lynch Wealth Management survey of young high net worth investors. The survey polled investors aged 18 to 35 (with at least $1 million in investable assets) and found that 72 per cent of them are self-directed investors, while almost half have “no financial advisor of any kind.”

So, how can financial advisors become relevant and indispensable to Millennials?

Understand Their Emotions, Motivations and Needs

In many cases, Millennials are experiencing longer periods of youth and are not getting married or having children until their thirties. Financial advisors should be mindful of this and adapt investment strategies to meet their clients’ needs based on where they are right now in life; furthermore, financial advisors also need to understand and respect the emotions and motivations of individual Millennials.

For example, the Millennials polled by Merrill Lynch – young high net worth investors – are often in this privileged financial position because they have inherited wealth from their families; at the same time, this wealth can cause them great anxiety, as the added responsibility of maintaining it may be very difficult for them. Financial advisors can better connect with high net worth Millennials by exuding genuine empathy and understanding about their situations – which often serves as a powerful ice breaker.

Additionally, young high net worth investors have entrepreneurial views and a strong sense of social responsibility, which can limit the amount of risk they are willing to take. However, according to the Merrill Lynch survey, this combination actually opens up new opportunities in what the firm calls "values-based investing" (VBI) and "impact philanthropy", which is quickly gaining traction with this group.

Embracing Technology to Attract, Engage and Keep Millennials
Modern technology enables financial advisors to simultaneously leverage collaborative client-facing and advisor-facing portals, while seamlessly aggregating data from both. Millennials may find accessible information and advice especially useful with budgeting – which is one of their biggest financial challenges according to a recent report from PNC. Digital channel engagement with financial advisors and tools opens up investing opportunities with three distinct groups: 1) Millennials that prefer a “do it yourself” (DIY) approach to investing; 2) Millennials that prefer an advisor-driven approach; 3) Millennials that prefer a hybrid DIY/advisor-driven approach.

Best-in-class portals can graphically illustrate how Millennials’ lifetime goals stack up against their financial situations. For example, overly-ambitious objectives can be identified and sensibly addressed through “What If” scenario planning, enabling financial advisors to collaborate with Millennials on middle-ground alternatives.
Some estimates claim that PCs and laptops will be obsolete within the next few years, but for a considerable portion of Millennials, these gadgets are already outdated. As a result, financial advisors should communicate with Millennials using tablets and smartphones, which are compatible with most client-facing portals; the best portals have integrated mobile apps that are specifically designed to maintain close communications between clients and financial advisors.

It is also very important to establish a robust presence on popular social media websites like LinkedIn, Facebook, Twitter and YouTube. These platforms should be used to showcase industry knowledge and thought leadership. Millennials want to see expertise, infographs, video clips and links to high-quality websites that share financial trends, expert research and data.

As Millennials add to their households, they will continue to rely on technology to accelerate information delivery via dashboards and aggregated views to facilitate crucial financial decision-making. Financial advisors offering Unified Managed Households to high net worth, mass affluent and affluent clients are expected to be the most successful in the future. Unified Managed Households focus on clients’ assets across the entire household, including all investment and savings accounts which are managed through multiple financial services firms. Similar to family offices for ultra-high net worth investors, Unified Managed Households are empowered through collaborative technology that lays the roots for multi-generational relationships based on trust.

Appeal to Millennials Now
Leveraging the power of technology – and the proven interest in technology by young consumers – will help financial advisors bridge gaps and better connect with younger investors.

Engaging Millennials and future generations in financial planning processes requires educating them first. To attract interest from Millennials, financial advisors should offer financial tips and complimentary budgeting tools on their websites. This will serve as a great starting point with Millennials, and it will help financial advisors demonstrate the value of their services more rapidly.

As Millennials become engaged in investing, financial advisors that offer the most up-to-date technology, inclusive of collaborative portals and UMHs will have the advantage in establishing client relationships with Millennials that will go the distance.