View any television commercial targeted at millennials – that is, young adults born in the 1980s and 1990s – and you’ll immediately notice that these commercials are very different from those targeted at older folks. A recent Groupon commercial, for example, contrasts a millennial stressed by a sink full of dirty dishes with short scenes of young adults having fun eating out at restaurants, ending with the message: “Save up to $100 a week on what you do every day”.¹ By comparison, dining-focused commercials targeted at baby boomers tend to feature scenes of families enjoying a meal at home around a dinner table. The unique qualities of the Groupon commercial make sense, as it appeals to millennials’ prioritization of experience, such as dining out, over ownership.² Meanwhile, the latter commercials speak to baby boomers’ continued faith in the American Dream of home ownership. Yet, despite the obvious differences between the two generations, too often wealth management firms attempt to reach millennials using the same marketing strategies that worked on baby boomers. I’ve seen time and time again that this “one-size-fits-all” approach simply will not work; rather, firms must use digital technology to reach millennials the way they want to be reached, and appeal to the values that matter most to this unique age group. Otherwise, they risk losing the $30 trillion in generational wealth transfer scheduled to occur over the next several decades.³ The future of WealthTech is becoming “millennial-minded”; here’s how to get there.

Embrace New Technology

What’s the first thing that you do when you wake up in the morning? If you’re a millennial, it’s likely to be checking your smartphone, as most of this generation looks at their smartphones within 15 minutes of waking.⁴ It should go without saying, then, that it is absolutely essential for wealth management firms to utilize social media and mobile technology to reach this generation. Firms that have the resources to create their own apps for mobile devices should do so, perhaps even by trying to “gamify” financial planning – as Seven Investment Management aimed to do by hiring video game developers.⁵ However, even firms that lack the available resources to create an app can still use technology to reach young investors.

For example, even the smallest firms should be using social media sites such as LinkedIn, Twitter and Facebook to reach current and potential millennial clients; however, some firms abstain from using these sites because they fear compliance issues or a dramatic increase in workload. The truth is, if firms are smart about using social media, neither of those fears will become reality. Compliance concerns, for example, can easily be alleviated by establishing a firm-wide protocol, including a set workflow and “signing off” procedure, for all social media posts. As part of that procedure, someone who is familiar with social media, specifically with regard to the wealth management industry, should be reviewing all posts both for relevance and compliance. That role can be done internally, if the firm has the staffing capability for it, or externally with the help of industry-specific social media consultants. Having this set protocol in place with designated responsibilities also helps alleviate firms’ concerns about increased workflow. I’ve found that, just like housework, social media becomes overwhelming when it isn’t regularly attended to. When internal or external social media personnel know exactly what they must accomplish in the short and long term – for instance, posting five approved tweets per day and responding to inquiries made via social media within two hours, they can adjust their daily workflow to accommodate these tasks. The key is avoiding a social media backlog, which will result in frustrated staff and clients and “stale” – that is, not regularly updated – social media pages.

But social media – and even apps, for that matter – are “last year’s fashion” compared with the advancements in artificial intelligence (AI) that are already taking place in the wealth management industry. Whereas traditional compliance surveillance systems generally have the shortcoming that they can only monitor and react to structured data such as trades, the IBM Surveillance Insight for Financial Services dashboard is a “cognitive surveillance engine” that uses the power of Watson (yes, the Jeopardy-playing computer) to take in and piece together unstructured data, such as employee email, as well as structured data, such as trade transactions, to create a thorough surveillance system that can alert flesh-and-blood compliance personnel to potential issues.⁶ In this way, the AI “dashboard” works much like human reasoning, as our own brains piece together information constantly, deciding what stimuli are and aren’t important.

Maintaining regulatory compliance is particularly important when trying to attract and retain millennial clients because, to be honest, this generation is sceptical of wealth management to begin with. And their scepticism makes sense. After all, this is the generation that witnessed the 2008 financial crisis, the controversial “bailout” of banks that were “too big to fail” and Occupy Wall Street. To make matters worse, the crisis may have literally hit home, as millennials may have seen their parents cope with losing their retirement savings or contending with upside-down mortgages (negative equity). And yet, even with their scepticism of the industry, 84% of millennials seek financial advice, a Deloitte study found – and so the demand for quality wealth management is here.⁷ That said, wealth management firms that land in the news due to compliance issues will face an uphill battle in trying to appeal to millennials already wary of the industry, which means that having strong compliance teams is essential to winning over the hearts of this generation. In fact, this truth brings us to another crucial step to becoming “millennial-minded”…

Realize that you Can’t Rely on your Brand’s Laurels

This realization will be the hardest for wealth management professionals working in “big name” firms; you know who you are. In the preceding decades, being part of these well-known firms was like having a seal of certified excellence, as brandishing the brand alone would open doors and instil a sense of trust in clients. This brand effect was due to baby boomers’ tendency to value trust, loyalty and long-standing relationships with wealth managers, and the high importance this generation places on brand. For instance, a baby boomer might choose a wealth manager just because it’s the firm that his or her family or friends use, and the fact that the firm has a “good reputation”.

However, having a high-profile brand or a long-standing relationship with a family is not enough for wealth managers to appeal to millennials, as they tend to value action and achievements, not legacy. And so, instead of relying on brand, firms must focus their marketing messages on recent actions, especially if they involve a philanthropic component. As a Search Engine Journal article explains, millennials like to align themselves with companies that have a larger purpose or cause, and they like to “live the story”.⁸ Wealth management firms can do this by highlighting the activities that they sponsor, such as a sporting event, the scholarships that they fund, or the ways that they help clients further their philanthropic giving. The key is to make millennials aware that your firm is more than a stodgy, old brand – rather, that it is a thriving, constantly adapting company whose activities they can be proud of.

Is it possible to become too millennial-minded? Some in the wealth management industry caution that firms’ push to reach millennials could mean overlooking generation-Xers (roughly speaking, those born in the 1960 s and 1970 s), who will also be inheriting baby boomers’ wealth.⁹ However, those fears are unwarranted, as being millennial-minded does not mean only trying to appeal to millennials; rather, it means evolving the way that firms do business to catch up with the 21st century. When firms take steps to strengthen their image and embrace new technology, such as AI-enhanced compliance systems, it’s good for clients of all ages because it means a safer and more robust wealth management industry. Isn’t it time we all became more millennial-minded?