Having grown up with the Internet, millennials are naturally a bunch of self-sufficient do-it-yourselfers. While past generations have relied on financial advisers to help them invest their money, this younger group prefers a take-charge approach where they run the show – at least in the early stages of their careers.
As millennials increasingly enter the workforce, financial advisers want to reach this important and influential demographic. However, given this preference for a hands-off approach, advisers need to change their business model and practices if they are going to win over this new generation as long-term clients.
Gone are the days of face-to-face meetings. Millennials want relationships that are as convenient as possible. As you would expect, this technology-savvy group prefers communication via text messaging, videoconferencing, email, social media websites (Facebook, Twitter, LinkedIn – you name it) and even blogging.
Given their penchant for all things digital, it should come as no surprise that millennials prefer to use software and online tools when investing, especially those who are just starting out. That’s why robo-advisers naturally appeal to these younger investors. Robo-advisers, which provide online portfolio management with minimal human intervention, could be an economically valuable tool when targeting this young group – especially at a time when they have low account balances but offer great potential as clients.
According to Adam Nash, founder of Wealthfront, a leading robo-adviser, “Young people have been largely overlooked by the [financial advice] industry because it wasn’t economical to service them. Technology changes the debate because it can be economical to help young people with their money.”
Since millennials prefer technology to human interaction when investing, using robo-advisers to enhance relationships with clients is a natural progression for advisers. Not only are advisers able to offer lower fees and minimums, but this type of innovative technology also could help them gain loyalty and solidify long-term relationships.
Offer the Best of Both Worlds
Of course, robo-advisers can never replace the human interaction desired when dealing with questions that have an emotional component. That’s why it is best for advisers to work in tandem with robo-advisers to strengthen client relationships. The technology enables investors to conveniently check their portfolio and make transactions online. But supporting a family or planning for retirement are complicated financial undertakings that require thought and consideration – something machines simply can’t do and human advisers can.
No matter how much millennials prefer the use of technology and algorithms in the early stages of their career, advisers can count on them eventually wanting the reassurance of a person who can support them through the next stages of their life. The key is simply finding the right balance to offer the convenience and simplicity they seek today with the personal help they will inherently need as their life and finances progress down the road.
Sharon Greenwald – Copywriter, gyro New York
As a copywriter at gyro, most of Sharon’s time is dedicated to the financial sector where her work explores its human side. By qualifying human insights, she is able to engage her audience in a more relevant and effective way.
On the weekends, Sharon enjoys spending time with her two millennial children, who inspire her everyday to not only think outside of the box, but create new ones.