Successfully engaging Millennials is critical to future-proof your business, writes Zoe Fielding.
Despite having a reputation for job hopping and low levels of asset ownership, most Millennials do take an interest in their own financial security.
Telstra’s survey, Millennials, Mobiles & Money: The Forces Reinventing Financial Services found that the generation’s financial priorities were to:
- save for the future (a primary concern for 82 per cent of Millennials)
- reduce debt and own a home (also top of mind)
- insure their home, car, contents, income or life (a priority for two out of three).
Many Millennials shun traditional insurance products purchased through traditional channels. (One reason is that insurance – particularly life cover – has a poor reputation among consumers in general: only 42 per cent believe they could rely on their life insurer when needed, reported PwC in its 2017 Future of Life Insurance in Australia report.)
Assessing their wealth
Millennials are now the largest demographic group worldwide, according to Telstra’s report.
In Australia, Millennials are predicted to make up as much as 42 per cent of the workforce by 2020. Their combined income has already topped that of the Baby Boomers, and their spending power is estimated at $US10 trillion globally.
Add inheritances to this over the coming years and Millennials’ personal wealth will balloon. Their share of global financial assets is forecast to hit 28 per cent by 2030.
Unsurprisingly, financial-services businesses – including insurers and advisers – are taking note. Successfully engaging Millennials as clients is critical to their future profitability.
The challenge for businesses is that Millennials – used to the speed, convenience and flexibility offered by the internet and mobile devices – have high expectations of service providers that often cannot be met using established models.
Where they’re looking for advice
Telstra’s research found that insurance advisers seeking to build relationships with younger consumers face a hurdle – most Millennials prefer to receive advice on financial products and services via mobile and digital channels.
They believe digital advice offers greater independence than advice given by a person: they look first to social media and online sources for information and advice on financial products.
Telstra also found that high-tech providers are also seen to offer greater speed, convenience, flexibility and customisation than traditional providers – all features that appeal to Millennials.
These preferences give room for fintechs to enter the market and actively compete against established insurers and advisers for Millennials’ business.
Online insurance service Trōv recently partnered with AAI, which underwrites Suncorp-branded policies and processes claims, to offer instant insurance cover for possessions through a mobile app. The service offers flexible, tailored policies at the customer’s point of need. The easy-to-use mobile interface employs familiar functionality.
But accessing life cover through such channels could leave Millennials exposed.
Telstra’s research notes that disruptors don’t have to be the best; they don’t even have to be good. They just need to be cheap and good enough to buy time for new entrants to build market share and improve quality.
Financial advisers’ opportunity
Traditional advisers and insurers can engage with Millennials who are searching for more than this. Many would like to have a true partnership with their financial-service provider but find what is on offer fails to meet their standards, Telstra’s research found.
In their relationships with financial providers, Millennials demand:
- genuine value
- personalised advice and services
- the flexibility to customise product offers
- connections at an emotional level
- privacy and security of finances, personal data, and financial interactions
- trustworthiness, especially a solid reputation for data security
- real-time, multi-channel interactions
- automated services.
While digital providers may have an advantage when it comes to convenience and customisation, advisers have other strengths, including their ability to offer personal advice and emotional support. Millennials place a high degree of trust in established brands – notably banks – to deliver privacy and security, Telstra’s research shows.
Advisers and insurers who can integrate tailored services through digital channels into their businesses, backed up with in-person support when appropriate, will have the greatest success in partnering with Millennials.