Millennials, those born in the 1980s and 1990s, are a key demographic for wealth managers because of the generation’s size. But they also present a challenge for advisers. Millennials are leery of investing after experiencing the Great Recession and are more focused on reducing debt and increasing savings than their parents. Courting this generation was the topic of “What do Millennial investors want from their financial services firms?” panel moderated by Steven M. Samuels, managing director of the client solutions and segments group at Merrill Lynch Wealth Management, at SIFMA’s Private Client Conference Thursday in New York City.
Advisers are wrong to assume Millennials are radically different from their parents, said Michael Liersch, director of behavioral finance for Merrill Lynch. He conducted a survey of Millennial investors and found that two-thirds have similar values as their parents. He also discovered in his research that Millennials are not as anchored to technology nor prefer self-directed investing as much as advisers often think they do.
Liersch said that Millennials want face-to-face interactions and are very focused on sustainable wealth management. Millennial inheritors of wealth are most concerned about making their money last. Inheritors tend to describe their financial situations as a “burden” and are worried about their wealth disappearing after the third generation, he said.
It’s important for wealth management firms to have younger advisers on staff who can relate to Millennials, said Evan L. Steinberg, a managing director and wealth adviser at Morgan Stanley Wealth Management.
Shelia Spainhour Shaffer, executive vice president of wealth management at Janney Montgomery Scott, plans to add a Millennial adviser to her practice so her firm can benefit from the generation’s perspective. Adopting social media, like Facebook, LinkedIn and Twitter, is also important for wealth management firms in attracting Millennials because social media communicates with them in the personal ways they prefer, Spainhour Shaffer said. Personalization also applies to wealth management. “They don’t want a cookie cutter solution,” she said. “They want a solution that is unique to them.”
Advisers can improve their communication to Millennials by reducing jargon, putting investing performance in a context that’s relevant for them and using compelling data visualizations to explain complex financial concepts, said Amanda Steinberg, founder and CEO of DailyWorth, an online personal finance community for women.