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To say millennials are a demographic coveted by the financial advisory industry at large is an understatement. Save for baby boomers, there arguably hasn’t been a generation registered investment advisors have been more encouraged to focus on than millennials.
For those not in the know, millennials are considered to be those born in the 1980s and 1990s. That’s far too broad and some organizations say the start date for millennials is 1981 with an end date of 1996. That’s too expansive as well and is the byproduct of Corporate America looking to apply a buzz word to a larger cohort. It is, however, what it is and that means advisors should not get caught up with strict definitions of millennials.
Rather, the points of emphasis should be the importance of expanding the number millennials on client rosters and understanding how to better serve clients in this demographic. There are good reasons to accomplish those objectives, as confirmed by a slew of data points and studies.
Let’s examine some important points for advisors looking to work with more millennials.
They Want Advice, But Mind Fickleness
The 2023 EY Global Wealth Research Report features some good news and important points of interest for advisors when it comes to working with millennial clients.
The survey, which polled 2,600 respondents across “continents, age groups and levels of wealth,” indicates millennials are more receptive to financial advice than older generations. Obviously, that’s good news for advisors. But wait. There’s more and the “more” says it’s one thing to land millennial clients. Keeping them is a different ballgame.
“Millennials are more than twice as likely (73%) than Boomers (29%) to switch between providers, to move assets between firms or to begin working with new wealth managers. They are also far more likely (49%) than the global average (33%) to have sought independent professional advice in response to external shocks,” according to EY.
Not surprisingly, millennial clients are comfortable working with advisors that are tech-savvy. Said another way, advisors that want to wring maximum benefit from this generation should consider immediately boosting their tech and social media games.
“32% of Millennials see a strong digital offering as important when selecting a wealth management provider, exceeded only by a good track record of performance (34%). Millennials are also more likely (59%) than average (40%) to seek a wealth manager that continuously improves its digital platforms with feature enhancements,” adds EY.
Knowing What Millennials Like
Sometimes, life is easy and we humans make it unnecessarily difficult. That’s probably true in the advisory business and applicable when dealing with millennials. Effective relationships with these clients can often boil down to knowing what these investors like.
That includes the advisor acknowledging, broadly speaking, millennials are not risk-averse and they are increasingly values-driven market participants. Said another way, this isn’t a municipal bond, fossil fuel stocks crowd. As for specific asset classes embraced by millennials, advisors should note that alternative and sustainable investments rank high on that list.
“When selecting a wealth management provider, Millennials place above-average emphasis on sustainable investment options (20% versus 8% of Boomers) and diverse teams (16% versus 5% of Boomers),” concludes EY.