Younger investors expect instant messaging, video coverage and membership of online communities, but wealth managers are struggling to adjust to these needs.
We are used to seeing the word ‘millennial’ as shorthand for young people, or even teenagers, often alongside shopworn cliches about avocado toast and phone addiction.
However, as of 2024 millennials can be as old as 43 – some are grandparents, business leaders or heads of state, and all have adult priorities. This includes investing for retirement that, for some, may only be a couple of decades away. The average age when a person starts investing is 34 years old, with women starting at 32 and men at 35. Since these are averages, many investors begin in their twenties or even teens. This means that if investment advisers don’t evolve to meet the new generation, they will miss opportunities and lose relevance.
Rise of millennial investors
Millennials now form a significant part of the investing population. As they come of age financially, with many entering peak earning years, their collective influence is shaping the future of investment management. Historically, investing was often associated with older generations who accumulated wealth over time, but with democratisation of financial tools and rise of digital trading platforms, millennials have become increasingly active in building financial portfolios earlier in life.
We are also starting to see the beginning of the ‘great wealth transfer’ to millennials from their parents, in which trillions in assets will flow down to younger generations, with a percentage of this invested.
This new wave of investors brings distinct preferences and values, rooted in digital accessibility and ethical considerations. The millennial generation, having grown up during the advent of the internet and mobile technology, is particularly drawn to investment opportunities that are both easy to access and aligned with personal values. For wealth managers and investment firms, this presents a unique challenge: appealing to a demographic demanding transparency, innovation and engagement.
Traditional approaches
Historically, face-to-face relationships were built through meetings, quarterly reports, and annual general meetings (AGMs). Communications were formal, with printed prospectuses and occasional updates on portfolio performance sent out by post. This worked well for an older generation of investors who valued stability and were accustomed to these time-tested methods.
Younger investors, however, find these methods disengaging. The idea of going in person to a meeting at a hotel conference room and listening to an investment manager isn’t appealing, even if it allows networking with fellow investors. They expect frequent, timely, and interactive communication. Annual reports and static presentations no longer suffice in a world where real-time information is available at the click of a button. A younger, tech-literate investor base is more likely to respond to dynamic, user-friendly platforms offering constant updates, mobile access and opportunity for dialogue.
Great expectations
Millennials have grown up with smartphones, social media and instant messaging, and their expectations for service and engagement in the investment world are shaped by these experiences. They value accessibility, where information is always available, and transparency, giving them a clear understanding of how their money is managed. They are also more likely to seek companies aligned with their social and ethical values, including sustainable investing.
Wealth management firms can no longer rely solely on static reports or impersonal updates. Instead, they must embrace podcasts, webinars and interactive platforms. Millennials are drawn to media that is engaging, relevant and digestible. At the peak of their careers and starting families, they aren’t looking for extra ways to use their free time. They need podcasts where financial experts break down complex topics, messaging apps allowing direct communication with investment advisers and interactive tools available at conferences or via virtual events.
Crucially, this generation is also accustomed to being part of communities, both online and offline. They want to feel connected, not just to their wealth managers but also to a broader network of investors. Firms that can foster community engagement through digital means, such as networking platforms or forums, will likely see stronger loyalty from younger investors.
Let’s get digital
Firms that fail to modernise risk falling behind innovative competitors. A reluctance to adopt digital technologies or failure to meet expectations of younger investors could lead to loss of market share. Start-ups and fintech companies are already capitalising on this by offering platforms prioritising user experience, accessibility, and engagement. In a crowded marketplace, wealth management companies that do not evolve may find themselves unable to compete with tech-savvy disruptors who can provide immediacy and convenience that younger investors crave.
Put simply, the next generation of investors is fundamentally different from predecessors. They are digital-first, demanding transparency, engagement and accessibility. Investment firms that fail to adapt to these preferences will risk losing relevance. However, by embracing the latest technology, wealth managers can effectively engage with millennials and younger investors, ensuring they remain competitive in an evolving market.
Matt Ryan, chief transformation officer, Reef
