Building upon the success and advancements from their predecessors, Millennials have an impact in everything from family dynamics to how we work. This level of influence has appeared to swell as the oldest of this generation moves through their late thirties. The good news for many Millennials is that the coming of age also means the coming of wealth.
In fact, according to the Spectrem Group, Millennials make up the largest share of $25 million-plus investors at 47%. What’s more interesting is that the youngest $25 million-plus investors have a significantly higher net worth than their older counterparts.[1] Individuals of this generation are committed to the right investment strategies and are finding success at a rather young age.
Turning to another area of financial services, Millennials are also impacting the somewhat ‘sleepy’ industry of insurance. There is a disconnect among Millennials between the perceived value of insurance and its perceived worth. While 42% believe insurance protects them and their family, only 4% believe that insurance is worth every penny[2]. Therefore, insurance companies are being increasingly tasked with showcasing the value of their products and engaging with Millennials in the right way.
Millennials have displayed more conservative tendencies with finances and it is has certainly paid off. The impact of this wealth can also be felt by three broader changes to the financial services industry:
- Greater communication, and through the right channels
- Enhanced education that speaks the right language
- Demand for greater socially responsible investment options
The investment and insurance industries continue to react to these needs with enhancements and new solutions. Though Millennials may be pushing the demand, the benefits become much more far reaching.
Talk To Me On My Terms
To some, a face-to-face meeting or even a phone call conversation may appear very dated. Why talk when I can just text you everything you need to know? This certainly remains true for Millennials and across some circumstances, but when it comes to investing and interacting with a financial advisor or insurance agency it may not be the whole story.
According to a recent Broadridge generational study, 70% of millennials prefer monthly or more frequent communications from their financial advisor.[3] This appears to be part of a broader cultural trend that has been embraced by Millennials who expect full awareness and transparency at the touch of a smartphone.
Insurance agencies should be aware that, while digital offerings are table stakes, it is not the one and only answer to providing a Millennial-friendly service. Consumers are looking for hybrid models that allow them to talk to a real person for more complex questions and are looking for coverage from a digitally-native platform that covers their unique behaviors, such as ride or home sharing and frequent property moves.
Call it the “Amazon Effect,” but this generation yearns to know what exactly is occurring at every step in the process. For a financial advisor, this means meeting them where they want to be—in-person for more exploratory conversations and digitally to answer simple questions. For an insurance agency, this means giving Millennials a look into how their money is being used. This hybrid model towards account access and communication is seen as a true new normal and is being embraced regularly across all generations.
The More You Know…
For Millennials with a conservative tendency, it often comes down to what they know about investing and insurance. This is a generation that witnessed the US economic recession first hand and do not take money matters lightly. So, for many Millennials to be on board, they must be aware of all facets of their options.
A recent FINRA study on Millennials found a lack of education to be a major barrier for non-investing Millennials. Besides the obvious reason for not investing (Need more Money, 44%) a need for education was stated by 12% of the respondents. And this lack of education was particularly pronounced among women with some indicating that they “have no idea where to start.”[4]
As a result, the industry has taken notice and developed education that is more accessible, engaging and helps to meet Millennials where they are. With that, education and planning resources have become mobile, digitized, and targeted to speak to the nuanced needs of the emerging Millennial investor. Digital planning and budgeting apps offer the right level of on-the-go support and communication, helping this generation remain informed and open to investment options.
Additionally, insurance companies are starting to address Millennials’ need for information and their price-consciousness. Five of the top ten funded insurance websites mention price comparisons in their tagline to attract Millennials that are looking for that information on their own instead of relying on insurance agents.[5]
Investing to Do Good
Now that Millennials have reached a certain level of wealth, backed by the right tools and education, they have also taken a keen interest in where their money goes to ensure that it ultimately aligns with their interests. This is where socially responsible investing (SRI) or environmental social governance (ESG) investing methods come in. Methods like these help Millennials truly put their money where their mouths are and back the causes that they are most passionate about.
A recent study by Crossmark Global found that only 6% of seniors were even familiar with ESG investing, while most (80%) of those aged 23 to 39 were aware of the strategy and 26% had already made ESG investments.[6] Similarly, EY points to the fact that Millennial investors are nearly twice as likely to invest in companies or funds that target specific social or environmental outcomes.[7]
The industry is certainly making strides to meet the growing demands of Millennials. According to BlackRock, employers have also broadened access to investment options, with a focus on ESG issues. More than a third (36%) of employers now offer an ESG investment option in their DC plans, up from 26% last year.[8]
Big Village’s youth research team, CASSANDRA, has identified this as a growing trend and called out some of the up-and-coming new-wave investing tools. The common theme among Newday Investing, Wahed Investing, and Plum are digitally enabled platforms that put the power of investing right in the hands of the user, while also curating options focused on socially conscious and ethical approaches.[9]
Then it comes to building a portfolio, this level of curation forces advisors to create more of a personal connection with their Millennial clients, to understand their specific needs and interests, and ultimately design the best options for them.
Millennials are also looking to make a social impact through their insurance choices, and the rise of digital has provided them another channel to give while boosting insurance brands. Startup insurance agencies, like Lemonade, are letting their customers, most of them Millennials, choose the charity that the firm will donate its unclaimed money to.[10]
Embracing Change in the Investment and Insurance Industry
Millennials have certainly made their mark in the financial industry. The changes detailed—stronger communications, enhanced education, and offering the right solutions—are only expected to grow as this generation continues to build wealth and an overall stronger presence in the market.
To garner success and a preferred status among Millennials, stakeholders will be tasked with responding to these demands or risk losing these Millennial clients to other players in an increasingly crowded field.
Big Village’s CX solutions are built for a changing world and to capture these ever-evolving demands. We would like to hear from you and learn how we can partner to future-proof your business solutions!
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[1] “Millennials Now Make Up Nearly Half of the Super-Wealthy: Spectrem” Think Advisor. March 19, 2019.
[2] “Millennials and Modern Insurance” Cake and Arrow. May 3, 2019.
[3] “Want more millennial investors? 5 ways to speak their language.” Market Watch. March 19, 2019.
[4] “7 Myths about Millennials and Investing.” FINRA. 2018
[5] “Millennials and Modern Insurance” Cake and Arrow. May 3, 2019.
[6] “Millennials have more money than you think — so expect ESG funds in your 401(k).” Market Watch. October 24, 2018.
[7] “Sustainable Investing: The Millennial investor.” EY. 2017.
[8] “Plan Sponsors Actively Evaluating, Changing TDFs.” Plan Sponsor. April 1, 2019
[9] “Invest in the Best.” Cassandra Daily. 2019.
[10] “Millennials and Modern Insurance” Cake and Arrow. May 3, 2019.