July 15 2015 - Thoughts@Stockal
But you know that already. No? Ok. Well, it started happening about 3 years ago when social media and other instant gratification tools, technologies and philosophies started having a noticeable impact on people’s attitude towards money. Spending, saving, planning and investing in that order. Over the last year-and-a-half, the millennials have begun to come-off age, from your perspective. From being the target of consumer brands selling food, fashion and lifestyle they are being actively pursued by money management brands, read apps and sites.
If you’re a traditional investment advisor/manager, you’ve probably NOT had too many opportunities to work with this, latest, crowd. 25-35 years old, earning well enough to not count pennies, treating income as largely disposable. It might help, therefore, to understand what their behavior looks like when it comes to money. This might throw up interesting thoughts on how they can be advised better. So here goes …
Less savings. For the last few years we’ve seen that higher income doesn’t translate into better savings. In fact, they’re treated as higher disposable income. This crowd saves less or to put it differently, thinks less about saving. So much so that, they have to be tricked into saving! Incentives work for some, but not all.
More credit. That they don’t mind credit-led lives would be an understatement. When everything they use, including daily use items such as phones and furniture, is on credit, how will they look at credit-based investing, one wonders!
Gamified lifestyles. Mobile-induced lifestyle changes are commonplace. Win a contest to get free gifts from Amazon, cross another level of your favorite mobile game and get free calling credits, refer “x” friends to get 2 months of free rides on travel apps etc etc. With everything gamified, and with trading/investing games popular anyway, where does it leave the serious young investor putting real money in the markets? Does she need your help and advice? Perhaps, more than ever!
Those are just some points. Additionally, robo-advisors like Wealthfront, Betterment and FutureAdvisor are taking up mind space when it comes to the millennial crowd. They work because their on-boarding experiences are pretty darn good and they end up making money for their users (note, not “clients”) more often than not.
Another common perspective on millennial users is that they tend to listen to advice a lot less unless it is coming from major influencers, they trust their peers and they trust systems (apps, websites et al) more than people. Of course, they want help/advice/support “whenever” they have time for it and do not depend on pre-defined schedules.
Good thing, though, is that because they are self-directed & DIY-friendly, they tend to be more willing to learn than their predecessors. Perhaps there’s an opportunity for you, the advisor!