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Millennials have an 8 second attention span, less than a goldfish. But when it comes to their finances, there is good news and bad news.
The good news is - they are desperately seeking your expertise. The bad news is – they won’t come looking for you (there are many reasons why this is the case, but that’s another article). So if you’re looking to expand your business to the next generation, 2016 is your short window to untap the 6.2M affluent millennials, with an annual household income of over $100,000.
Here’s why Financial Advisors need to engage millennials this year…
FinTech Startups
Betterment, Wealthfront, BillGuard, Square, etc…are all here to stay. Investment in FinTech startups doubled from $10B in 2014 to $19.7B in 2015. And with that, consider another trend of ‘crowdfunding’, which will surpass VC money in 2016. As these innovators continue to get more capital to perfect their offerings, it’s important to remember that they have been out in the market for years now, despite their ‘startup’ label. They have identified and appealed to their target market (millennials), improved their products/services based on feedback, familiarized themselves with the regulatory obligations, and more importantly, have begun to threaten the traditional financial institutions. While the long-established banks figure out how to handle these new disruptors, whether it’s through building their own competing technologies, acquiring, or partnering, it is essential that you do your part to differentiate yourself in a way Gen Y values. You’re not just facing off with other financial advisors anymore…convenient, straightforward, affordable technologies are playing your game as well.
The Presidential Race
2016 marks what I call the “Millennial Tipping Point” in politics, where for the first time, millennial and baby boomer voters will almost exactly equal. Gen Yers will represent 30.5% of eligible voters compared to baby boomers’ 30.7%. So if the right number of young voters show up to the polls (and they most likely will), the probability of them forcing dialogue and influencing policies for the matters they care about are high (almost definite). And as the generation that has accumulated the most debt, financial and economic issues are top priority. Also, let’s face it, their feelings about Wall Street aren’t exactly peachy. Shaped by the bailout, Occupy protests, and the Great Recession, the level of distrust millennials have towards the big banks is strong enough to severely disrupt the industry. The fundamental disconnect, though, is that there is a mismatch between Gen Y’s beliefs and Wall Street’s culture. If you can understand this gap, there’s an opportunity for you to fill in the space and run your practice in a more millennial-friendly way.
The ‘Baby Boomer-Millennial’ Overlap
If you’re thinking millennials aren’t your target market because they don’t meet your ‘criteria’, then you’ll surely miss the boat. Although this generation may not have your desired amount in investable assets, it’s important for you to establish and nurture the relationship before it’s too late. This is the part where you have to recognize their journey, expectations, and values. Why isn’t John buying a house…is it because he prefers to rent or he really can’t afford it yet? Your window to attract this generation is very short, but the opportunity is huge. As of 2016, majority of millennials have already graduated college (with a lot of debt) and are setting short and long-term goals. They are in the midst of making mature financial decisions – paying off college loan, buying homes, starting families, supporting aging parents, and even inheriting assets – all of which require your advise. With that in mind, start thinking strategically about how you can leverage the relationships you already have with your baby boomer clients to get to know the next generation – their children and grandchildren. Although the new, high-tech products and services seem to be the most appealing to Gen Y, you have an advantage if you’re currently advising their parents. Studies confirm that most millennials want their parents to play a large role in the financial counseling process. So manage this ‘overlap’ period while you can to depend on your existing clients to introduce you to their children.
Overall, it’s certain that the financial industry, as we know it, will drastically change thanks to the millennials. And in order for you to get in front of it, you have to react quickly by engaging and educating the generation. It’s time for you to structure your practice differently, discover how to bridge the gap between the traditional thought-process and the new technologies, digitally communicate your value in an authentic, human way, and most importantly, recognize the impact 82M people will have in shaping society.