Investor demographics are changing, and firms that wish to be around in five to ten years need to change with them, or risk being forgotten. The question front of mind with many heads of distribution is “how we will we will tap into the millennial generation?”. Without a doubt, millennials require an entirely different approach. Many firms will need a complete re-architecture of their marketing and distribution strategy, including their digital engagement capability. Evolve or die, dinosaurs beware!
Short term investing and liquidity seems to rule within the millennial generations. Their investment history is tainted by a view of the market that is either a blip or a pattern for the future. Long-term pension provision is competing with the needs for larger house deposits and the ready access to cash.
Millennials need a different approach, whether Robo-advice is the answer is another day’s discussion. There are many super exciting entrants to the Robo market, albeit with a lot of the same approaches. A strong, unique selling point is needed to be successful and to deliver the scale required to ride the short and medium term cash drain these firms are experiencing. A hybrid world is a likely outcome, with advisors embracing technology, not competing with it, to service their customers more efficiently.
Another hot topic is ‘Direct v Channel’ – expect more firms to add ‘direct’ to their strategy, but I do not see this as a market mover. In my opinion, the rise of direct is not going to be a game changer as long as the power of the distributor is on the rise. They have tremendous buying power and are flexing their muscle. Direct will not impede this as the investor wants to work with open architecture, as do the advisor community.