Speaking at the WMA’s Millennial Forum 2016 last week, Oliver Mustin, a chartered wealth manager at BRI Wealth Management and WMA member, believes the industry is ready to have its “uber moment”.
“Many millennials will know more about their uber ride home last night than they will about many aspects of their financial affairs,” he said.
He argues that this illustrates the need for a “simple, easy to understand product with transparent fee structures”.
Successive financial crises have created a generation that generally mistrusts the financial services industry, he added.
“Millennials are quite cautious in their investments. Those that invest do so conservatively, very few invest in shares, favouring physical assets and cash,” said Mustin
“Many millennials will know more about their uber ride home last night than they will about many aspects of their financial affairs.”
Latest figures from Deloitte show that by 2020, millennials will be the largest ever generation that have ever existed, with Europe and the US making up 25%. It predicts that aggregated net worth of these individuals will double in the next four years up to $24trn (£13trn, €17trn).
Comparing the demographic to previous generations, Mustin said that many possess low levels of financial knowledge, often ignoring traditional investment principles such as developing and following a financial plan, investing in riskier assets early on and de-risking as they near retirement.
“This is clearly a generation that will drive change in the wealth management industry.
“For the wealth management industry, one of the biggest pitfalls we face is not to understand the needs or wants of this generation and not to adjust accordingly,” he said.
Stephanie Gopalakrisna, head of marketing and corporate communications EMEA for Pershing and a WMA member, agrees that the industry is facing a crisis on how to shore up business from future generations.
“We’re talking, as an industry, to people who are over 50 so why would the millennials hear us or even listen to us,” said Gopalakrisna.
Gopalakrisna believes that the sector can address this by setting up a website - similar to the hugely popular financial comparison and advice website Moneysavingexpert.com - to provide unbiased investment information to the millennials.
“If we’re successful then we’ll have a one-stop shop where millennials can go find information,” she said.
Describing the website as a “social enterprise”, she said it should be a not-for-profit service, funded by levies on the financial services industry - including retail banks - but run by an entirely separate entity.
“The wealth management industry should set up social enterprise – a stand-alone online platform – that will address the education gap because it will unbiased, free and clear information to millennials,” said Gopalakrisna.
She added that unlike Moneysavingexpert.com - which is funded by adverts and sponsorship - the proposed website should not include any form of advertising in a bid to foster trust in the industry.
"We are not trying to sell anything, we just want to improve undertandinf of the industry." said Gopalakrisna.