Updated on: September 14, 2023

This is the second blog in a three-part series on serving the underserved millennial generation—you can read the first post here to learn about new pricing models for financial planning. This post will discuss the underlying trends behind evolving expectations for great digital experiences and how advisors can meet these high expectations to build trust when providing financial planning for millennials.

As the Baby Boomers retire and leave the workforce, Millennials are accumulating wealth and nearing the peak earning stages of their financial lifecycles. This new generation holds an entirely different set of values, and financial professionals must redefine the playbook for engagement.

While Millennials, and the broader economic circumstances they face, are different than preceding generations, there are two major qualities with implications for financial services: their lack of trust in financial institutions and financial professionals, and their high expectations for a seamless digital experience.

Those who want to do financial planning for Millennials, who are widely underserved in the industry, must find a way to deliver an exceptional, transparent, and digital planning experience.

Digital Expectations from a New Generation of Clients

Digital-native Millennials have high expectations when it comes to the use of technology. The standards for an online experience are set by their everyday interactions with companies like Google, Amazon, and Netflix. For financial professionals, this means they aren’t just competing against other companies, they’re competing against the tech giants of the world as well.

Because of their everyday technology use, Millennials have come to expect an experience that’s self-directed, transparent, and involves self-education and financial literacy. Millennials desire robust account aggregation for an easy onboarding experience, as well as speedy communications and solutions to their problems through any channel that’s most convenient.

Curating this kind of experience doesn’t happen all at once—it takes smart, incremental investments in technology to deliver a truly exceptional experience. When it comes to meeting the high bar for a digital experience, most firms today face challenges from legacy IT systems, cost pressures, and a lack of integration between existing systems, among other issues.

A recent study by Celent and Dow Jones found that the mismatch between technology use by end clients and financial professionals leads to a client engagement gap. More specifically, this gap can create a lack of high-value interaction and perceived value from financial advice. These are among the primary causes of low trust in financial institutions on the part of Millennials, as well as why customer loyalty and advocacy are low.¹

Millennials demand a new type of experience, and while that experience may require a change in technology, there are ways that firms can start to position themselves as trusted allies and engage this underserved segment of the population.

The Role of Trust in Building the Future of Your Business

Distrust of financial institutions is a hallmark Millennial trait. This generation grew up with the bursting of the dot com bubble, entered the workforce during the Great Recession, and has since seen high levels of pandemic-related volatility in the markets.

In fact, fifty-seven percent of Millennials say their advisor is primarily motivated to make money for themselves and their employer, and one-third say their advisor doesn’t take the time to get to know them.² Additionally, nearly half of wealth management clients are dissatisfied with the fees they pay for advice, with Millennials being the most dissatisfied group of clients.³ This dissatisfaction is driven by uncertainty around the fees they’re paying and how they’re paying them. On top of all of this, Millennials distrust big brands.

While all of this may seem like bad news, I think it points to the great opportunity that financial professionals have to engage this generation with personalized, human relationships that focus on their core values. I’ve written at length before about how firms can introduce greater transparency into their pricing, into the planning process, and how they can demonstrate their value to clients. There are proven ways that advisors can build open, trusted relationships with this generation.

– Create simple, transparent pricing. Communicate upfront about pricing, compensation, disclosures, company values, and other relevant information in a digestible format to give clients a clear idea of exactly what they’re paying.

– Loop clients into the planning process. Make clients part of the planning process to show them you are considering their full financial picture and working in their best interest.

– Prove your value. Demonstrate the impact of advice by tracking the progress and achievement of clients’ most important goals.

This generation is wary of financial institutions, but financial professionals have a number of tools at their disposal to secure millennial trust to build the future of their business.

If Millennials know what they’re paying, as well as what they’re paying for, they’ll be more likely to feel that they’re a part of a collaborative, transparent relationship.

Using Financial Planning Software to Build Trust

Despite any inherent mistrust that Millennials may have of financial institutions, or uncertainty around pricing or their advisor’s intentions, there are many different ways that advisors can use financial planning software to build trust with millennial clients.

Educate Prospects and Existing Clients

As I’ve mentioned, Millennials seek an experience that involves self-education. Offer clients a library of content on personal finance and healthy money management practices to help them effect change for themselves and learn at their own pace. Posting educational content can also be an effective way to engage with prospects to drive new business.

Reach Millennials Where They Seek Advice

Most Millennials, when they’re searching for a trusted source of financial education or advice, turn to their employers. Financial professionals that want to build trust with this generation should find ways to engage their employers with financial planning tools. This way, you position yourself as a valuable financial resource in a trusted channel for advice.

Deliver an Omnichannel Experience

Millennials expect a seamless experience across all channels. Make your planning tools available on any device and allow access to the most up-to-date information at any time. Additionally, you’ll want to make yourself available for support through any channel at any time.

Demonstrate Your Commitment to Financial Wellness

Give Millennials budgeting tools and small challenges that encourage positive behavioral change. Gamifying advice in this way, along with providing tools that help Millennials help themselves, can demonstrate your genuine desire to help their overall financial wellbeing, disproving any existing biases they have that financial professionals are only motivated to make money.

Empower Clients with Hybrid Advice

Cater to Millennials’ desire for a self-directed, hands-off experience by providing a combination of digital tools and personalized advice. Let clients manage as much of their finances as they’d like, but make yourself available to provide episodic advice as these clients need it. This type of high-touch, low-effort experience is a great way to stay in touch with clients that want to serve themselves.

This generation is widely underserved with financial advice. For those that can deliver a next-generation digital experience and work to build trust with Millennials, there is an enormous market opportunity for advice.

To learn more about connecting with Millennials, read the next and final post in this series: Use Financial Wellness Technology to Connect with Millennials When and Where They Look for Advice.

Sources:

1.“Designing the Digital Wealth Management Client Experience.” Dow Jones n.d. https://visit.dowjones.com/content/celent-digital-wealth-management/.

2.Thompson, Kendra, and Edward Blomquist. “Millennials & Money: The Millennial Investor Becomes a Force.” Accenture n.d. https://www.accenture.com/_acnmedia/PDF-68/Accenture-Millennials-and-Money-Millennial-Next-Era-Wealth-Management.pdf.

3.“How to Align Pricing with Value through Transparency and Variety.” Ernst & Young, 2019. April 26. https://www.ey.com/en_us/wealth-asset-management/how-to-align-pricing-with-value-through-transparency-and-variety.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

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