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Millennials require a hybrid approach to advice

Millennials prefer an advice mix that allows them to move between technology-driven advice and human expertise.

With just under 30 years left until the first Millennials begin retiring, time is on their side when it comes to long-term investing. Although highly educated, many Millennials begin their careers heavily burdened by student debt and the high costs of living. Because of this, Millennials are staying with their parents for longer and delaying the point at which they purchase their first property. They are also getting married later in life and choosing to have fewer children.

Interestingly, research shows that Millennials earn less and have half the net worth their parents did at the same age. The unique dynamics and challenges faced by Millennials necessitates a new approach to financial planning that appeals to these digital natives.
Speed, low cost and mobility are buzzwords for this generation who is happy to spend more of their income on technology and staying digitally connected. Although they embrace tech-driven financial planning and require 24/7 access to their information, it is interesting to note that they still desire the nuances of human advisor interaction – especially as their life circumstances become more complex.

Recent research by Accenture shows that only 20% of Millennials use a Robo-advisor exclusively, whereas two-thirds of this generation use some form of hybrid advice model. This generation requires a financial plan that is fully flexible and adaptable and is happy to have virtual meetings with their advisor.

They don’t like paper documentation and prefer to be able to activate digital solutions that are all in one place and fully accessible. Simply put, cutting edge technology is a basic requirement for a Millennial client, and financial advisors need to keep pace with changes in technology to meet them where they’re at.

With the average Millennial checking their phone 150 times per day, the temptation to monitor their long-term investments daily is huge – making them emotionally susceptible to short-term market fluctuations. Although they have more access to information than previous generations, many Millennials attest to suffering from information overload especially in the investment space.

Being permanently online, they are also more exposed to scams and online fraud. As such, they feel more comfortable having access to a human advisor to guide them through periods of uncertainty or market volatility.

Well-known for having multiple careers (often simultaneously) as well as a few side hustles, cash flow management and budgeting can be challenging for this generation – especially as many choose to do stints of working and living abroad. With regular job changes, Millennials are confronted with more opportunities to access their retirement funds which can have detrimental effects on their retirement planning. Because of the more fluid nature of their careers and earnings, Millennials are reluctant to be locked into an investment and require a financial plan that can adapt to their lifestyle.

Entering adulthood at the height of climate change awareness and activism means that many Millennials are interested in ethical and sustainable investing to ensure that their money matches their value system.

The Accenture research reveals that Gen Y is less trusting of ‘old school’ financial planners, with many choosing to fire their parents’ financial planners after the wealth has transferred. Having had little experience with commissions for advisors, this generation is more comfortable paying a professional fee for advice – provided the fees are transparent and justified. Although price conscious, they are happy to pay for a quality service that provides a single point of entry to the full suite of financial services.

Many consider multiple channels of communication both frustrating and cumbersome, preferring a technology-based system which allows them to transition seamlessly between self-help and human advice.

As Millennials move through their various life stages, they tend to seek a financial advisor with life coaching skills who can come alongside them to navigate larger and more complex financial decisions. The hybrid advice mix, which allows them to move between technology-driven advice and human expertise, seems a perfect fit for this generation.


Devon Card

Crue Invest (Pty) Ltd

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