Creating Millennium-Friendly Financial Advising
People often need financial advice that’s best suited to meet their needs, which differ from one generation to another. You cannot expect millennials to consume the same financial advice as baby boomers. Times have changed, so financial institutions and experts also need to change their approaches to cater for the needs of a much younger clientele that’s distrustful of not only the government, but also financial institutions. Millennials are also tech-driven and they do not use credit cards as much as their predecessors. This is partly due to the fact that they have first-hand experience of one of the worst recessions in history.
To learn more, checkout the infographic below created by Ohio University’s online Master of Financial Economics program.
How Millennials Manage Their Money
In 2015, the number of millennials stood at 75.4 million while the number of baby boomers stood at 74.9 million. Millennials are described as anyone who is between 18 to 34 years old. Baby boomers, on the other hand, are between 51 to 69 years old. Between the two age groups is Generation X, which is made up of individuals who are 35 to 50 years old.
According to recent statistics, the median net worth of the top 20% of millennials is eight times higher than that of the lower 80% of this group. This is twice the ratio reported in the year 2000. Millennials also have a different saving culture compared to their predecessors. For instance, investors aged between 21 to 36 years of age hold more than half of their portfolio in cash with only 28% going into stocks. Older generations, on the other hand, held only 23% of their portfolio in cash with 46% going into stocks. It has also been revealed that 40% of millennials worry about their finances at least once a week.
Research studies have revealed that millennials are 1.5 times more likely to discuss their finances online. What is shocking is that a third of consumers aged between 18 to 29 years old have never had a credit card.
How Millennials Spend Their Money
While it might have been taboo for baby boomers to talk openly about money, millennials discuss the topic openly and in depth. They also embrace experiences over material goods when it comes to spending their money. They save for the future and never pay the full price for anything. A recent study found that three in four millennials would rather spend their money on an experience than on a material object.
Growth of Tech-Driven Personal Finance Services
Over 80% of millennials own a smartphone and the number is steadily increasing. Over 89% of millennials usually check their mobile devices within the first 15 minutes of waking up. They also expect their financial institutions to be mobile and web-friendly. On the other hand, over 87% of millennials seek financial thought leadership through at least one social network.
What Millennials Look for When Picking a Financial Institution
Millennials have two main financial priorities; paying off their student loans and other debts, and saving for the future. On average, they spend 43% of their income to pay down their debts and put away 38% of their income as savings for the future. Three out of five millennials would like their bank to be a financial partner as opposed to just another business that feeds off their sweat. This means tailoring products to meet their needs and loosening up some of their strict terms and conditions. After all, the relationship can be beneficial to both parties without any of them feeling like they’re getting a raw deal. What is shocking is that only 32% of millennials feel like their bank understands them. This is largely due to the fact that banks and other financial providers still offer solutions to meet the needs of baby boomers.
Before making a purchase, 84% of millennials always consider the values of a business or brand. If they are not in line with their own values, they always shop around for a more suitable brand.
10 Tips for Connecting with Millennials
- Think Mobile First – Consumers nowadays use the Internet to find products, services and information about a particular brand, and their preferred tools for accessing the internet are mobile devices. To connect with millennials, therefore, you need to have a mobile app through which they can access your services. Alternatively, you should design a website that is mobile friendly.
- Help Them Walk Before They Run – Financial growth is normally gradual, so you should develop solutions with low barriers of entry and can help millennials to manage multiple financial priorities as well as any urgent financial priorities they may have.
- Give Credit a Makeover – Since millennials have different needs and values, you should reposition your credit products to align with those values and needs.
- Make Financial Planning a Gateway – As a financial adviser, you should develop financial plans that will provide millennials with a much-needed service.
- Consider Everyone a Competitor – Do not just look at the real world for competitors because millennials use social networks to get financial thought leadership, so you also need to offer better thought leadership through the same platforms.
- Make it Rewarding – Millennials normally choose brands carefully, so be sure to make them feel special by rewarding their loyalty.
- Make it Personal and Actionable – Demonstrate understanding through personalized communication. Be sure to also listen before prescribing.
- Educate Emphatically – You need to be present where millennials are talking about money so that you can fully understand their needs and expectations. This will make it possible for you to come up with solutions that are tailored to meet the needs of millennials.
- Provide Holistic Solutions – To fully connect with millennials, you should provide solutions that take their priorities into considerations and can help resolve them.
- Connect Visually – Use photos, videos and data visualization to persuade and inspire millennials. You should know that millennials understand one language best. That is images. Make videos, infographic and use photos to connect with millennials. This audio-visual material can also be used to express your values; which millennials will want to know about.
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