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Three Factors That Shape Millennial Engagements

Wealth advisors need to understand the background, lifestyles and investing attitudes of millennials in order to prepare for the future.

Three Factors That Shape Millennial Engagements

Millennials are poised to inherit an unprecedented amount of wealth. In the next two decades millennials will acquire more household wealth than any generation in modern history, according to some estimates.

Not surprisingly, wealth managers think about millennials a lot. So it’s important to understand the three historical trends that have shaped this generation.

1. Millennials are true digital natives.

They’re the first generation to come to age with technology front and center. Like previous generations, millennials are inclined to invest in brands they understand and trust. They think companies like Google, Tesla, Amazon and Facebook are edgy, socially conscious and worth investing in.

In addition, millennials flourish in an always-connected world. They expect on-demand accessibility from the companies they work with. For wealth managers, this means finding ways to ensure that you have the technology to meet millennials on their terms. Millennials, for instance, tend to prefer virtual communication and remote meetings. They want self-service capability. They want to text their advisor. Digital transformation isn’t solely about transforming into a digital-first organization, but about being ready to adapt as your clientele evolves.

2. They’ve experienced a bear market firsthand. 

Millennials grew up during the worst economic recession since the great depression. As such, they tend to be more suspicious of professional finance than previous generations. They don’t trust wealth managers like their parents do. Accordingly, they tend to do far more research on their own. They tend to prefer self-service. They’re more likely to be in index funds than managed funds.

Building trust with millennials will be key for wealth managers moving forward. Some advisors have turned to lower-cost level fee consulting for younger investors, aiming to build a relationship slowly over time. Larger firms have started to rely more heavily on webinars and even podcasts to build credibility. In short, experimenting with ways to forge relationships and loyalty will pay dividends in the long run.

3. Millennials came to age in the era of Obama.

Barack Obama made civic participation cool for a lot of young voters. The fact is, millennials are far more civically minded and politically engaged than is widely believed. Often the perception is that millennials are plugged in and checked out. But college campus activism is way up. And, for their respective age group, millennials volunteer more and are more socially conscious than perhaps any other generation.

Consequently, millennials are far more likely to pursue impact investing. Looking beyond the bottom line, many millennials seek investments that protect the environment and promote corporate responsibility. On many college campuses, for instance, student activists successfully pressured endowment fund managers to divest from industries like fossil fuels and privatized corrections as well as those that exploit child labor. In addition, we’ve seen the rise of socially conscious ETFs, digital microfinance platforms and crowdfunding tools designed to achieve both financial and social returns.

Knowing where millennials came from will help us predict where they are going. And we can meet them there.

To read the other articles in our Millenial Wealth Insights series, see the related content below.

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