Young Investor Trends

Four Ways Financial Services Can Attract Millennials and Gen Z

About a 2 min. read

Julia Walker
Account Director

Unlike the way many articles attempt to portray young investors as a single-minded group, Millennials and Gen Z are made up of a diverse group of people with various attitudes, motivations and needs. In fact, CMB has successfully created several attitudinal segmentations among young investors (18-39 years of age) to allow for more targeted strategies for our clients to “win” these audiences early-on. Of course, within the Financial Services industry, acquiring customers early is important to developing a long and fruitful relationship, loyalty, advocacy, and maximizing the lifetime value of the client. That said, some fundamental differences in these younger generations have created shifts in the way that firms must create and position products for these consumers. Below are some important trends impacting how Financial Services firms should attract young investors today:

Make it Social:

Younger generations rely more heavily on social media for financial education and advice. The hashtag #personalfinance on Reddit and #investing on TikTok have been viewed billions of times. According to a CNBC/Momentive Invest in You survey, the most popular way to research investment ideas is via social media. Just as young people are turning to Instagram, TikTok, and YouTube for what viral leggings to purchase or feta pasta recipe to try, they are getting financial guidance on what credit card to open and which investments to select. The downside is that while there is an abundance of information, it can be difficult to discern which sources are credible. Given younger investors are more anxious about outliving their retirement savings and the complexities of financial products than their older counterparts, there is an opportunity for firms to help ease those concerns with trustworthy information on these platforms.

Pay Attention to Cryptocurrency:

According to a Piplsay survey, nearly half of Millennials now own cryptocurrency. As crypto enters the mainstream more, brands are taking advantage. For instance, BlockFi offers a credit card that allow consumers to earn Bitcoin as rewards and Venmo allows users to buy and sell crypto as well as access in-app guides and videos to learn more. As its adopted more widely, consumers will be seeking out guidance on how to incorporate it in their portfolio.

Be Digital-first

Growing up as digital natives, Millennials and Gen Z are very comfortable with online tools and enjoy the instant gratification it provides. They are doing most of their banking and investing online from making trades to managing their budgets. Meanwhile, they rarely step foot in brick-and-mortar branches and one-third of the Gen Z consumers have never even used a paper check. Gen Z is particularly mobile-centric and expects their financial services providers to offer an app that is easy to use. Ensure that website and app experience are up to snuff for young investors to consider your brand.

Align with their Values

ESG investing grew throughout the 2010s, driven largely by Millennials.  At the start of 2020, there were $17.1 trillion in sustainably invested assets, primarily focused on climate impact. And as social justice movements surged, the ‘social’ part of ESG investing grew along with it. Just as we are seeing a trend of Millennials shopping with their values over price for consumer goods, they view ‘values’ as an important consideration in a comprehensive portfolio, rather than solely focusing on returns. Helping young investors fulfill their identity needs by enhancing their self-image through investing in responsible funds, will be important for attracting and keeping their business.

Meeting the needs of young investors now can lead to loyalty and opportunity to win more sophisticated business down the line as their needs evolve. Financial Services firms need to take note of the above, but working with a market research firm such as CMB can help identify other trends and segments Financial Services firms need to be aware of. For more information on how CMB can help to uncover insights for you, contact us today.