Tailored and trusted advice key to supporting the millennial generation


Australia is on the precipice of a $3.5 trillion intergenerational wealth transfer. Industry research estimates it equates to some $320,000 per recipient.

Yet, in the lead up to this significant transfer, we know that many are unprepared. In fact, research by Roy Morgan revealed that only 7.4 per cent of millennials have used any type of wealth management product obtained from a financial professional.

COVID-19 has perpetuated existing uncertainty, exacerbated mounting market volatility and increased the need for all of us – particularly younger generations who have never experienced such market uncertainty – to seek financial advice.

It also highlights the importance for financial advisers to be prepared to support this cohort with their unique financial needs.

Trusted and tailored advice will be key to supporting the millennial generation through this sudden accumulation of wealth in a time where stability is scarce. But there are key differences in the needs of this cohort when it comes to providing financial advice.

Confidence to clearly define the scope of requirements

Financial advisers need to understand millennial clients and speak clearly to their needs.

Have you ever been to the doctor with a sore throat, and walked away having been assessed for every disease under the sun, resulting in a much higher cost than what you anticipated or were prepared for?

Yes? Well, that’s what could happen if financial advisers aren’t provided with the tools and confidence to clearly define the scope of advice needed for their millennial client. Whereas older clients – accustomed to the advice experience – are comfortable with a full-scale assessment, millennials who are new to advice, are focused on their here and now. While it’s critical to still understand the bigger picture facing each and every client, millennials want a more targeted assessment process.

With a significant onus on the financial adviser to devote large amounts of time conducting detailed due diligence, advisers need to be confident to hone in on the individual, specific needs for each client, without giving them a costly and unbeneficial head to toe examination.

Guiding investment principles

Financial advisers need to understand trends and philosophies guiding millennial investment behaviour.

Responsible investing is on the rise amongst all cohorts, with responsible investments accounting for more than half of all professionally managed assets in Australia up from 16 per cent in 2014, according to Money Management, but millennials are the most likely cohort to consider social issues when investing.

A survey of investors, conducted by Nuveen, also found that 95 per cent of millennials would prefer to invest in ways that will positively impact the environment, in comparison to only 63 per cent of non-millennials who agreed with this statement.

What’s clear, is that when it comes to providing advice for the millennial cohorts, advisers need to not only be attuned to the needs of the client, but also to their beliefs and guiding investment principles in order to serve the cohort well.

Taking advice digital

Financial advisers need to use the tools that millennials use.

Millennials are digital natives. They are essentially the first cohort to come of age at a time of prolific digitisation. Their exposure to the internet, social networks and mobile phones, all at an early age, have made them the first digital generation.

As such, many millennial clients are seeking flexible and online advice tools.

In the US, millennials are twice as likely as young boomers to consider using a robo-adviser, at 51 per cent and 24 per cent respectively, while 36 per cent of Gen Xers reported the same. The same trend is yet to hit Australian shores in full force, with research house Investment Trends finding only seven per cent of active online Australian investors accessing robo-advice tools in some form.

But the cohort is still driving digital change, and in order to cater to this generation, advisers need to become comfortable with electronic mediums such as video conferencing and document sharing infrastructure.

Next steps

The financial advice industry has a job to do. A job to engage with and educate millennials of the benefit of financial advice ahead of the greatest intergenerational wealth transfer in history, in a time of immense volatility. To do this well, will take some moves from all participants to increase accessibility, an understanding of their investment and wealth principles, and embracement of digital and communication technologies.

By Matt Brown, Executive General Manager

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