October 18, 2018How to Engage the New Generation of Investors

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As Generation Xers hit their prime earning years and millennials enter into the workforce, they’re taking center stage as the new generation of investors.


This breed of investors is tech-savvy and self-directed, seeks work-life balance, values freedom and responsibility in the workplace, and dislikes micromanagement. As many of them approach the middle of their working careers and potential peak earning years, they’re becoming increasingly relevant for banks and other financial services institutions. They even have their own label, "mass affluent," due to their extensive presence and financial wealth.


The banking behaviors of mass affluent customers are different from pure retail banking customers: They request more information, look for safe savings and investment products, show interest in new technologies and digital banking, and are interested in banking across regions.


Moreover, they take a more financially proactive role in societal wellness, considering that they’re twice as likely as other generations to invest in companies with a stated social or environmental impact. The next generation of investors is moving away from the old return on investment concept in favor of a more tangible approach, not only focusing on financial returns but also giving value to their time and trust.


They don’t expect merely a financial return, as they also have a focus on socially responsible investing and want to know that their investments are helping to generate social and environmental good.


Engaging the mass affluent population has proven difficult. Banks are still not able to properly serve them, as this cohort share characteristics with both typical consumer banking clients as well as high net worth individuals (HNWIs), although their needs more closely resemble those of HNWIs. So how can banks attract this high-potential segment? What do the mass affluent need to become loyal banking customers?


To better serve these customers, banks should start developing products and/or services that take the following into consideration:


Anytime, anywhere: Generation Xers and millennials tend to perceive themselves as very busy and consequently want financial advisors who can save them time. They appreciate direct contact with their relationship manager and, outside of office hours, easy access to their products and services through virtual channels.


No “one-size-fits-all” offering: Younger clients look for individualized attention from their advisors, setting up face-to-face meetings when needed and leveraging on technology to provide personalized investment offerings. To set themselves apart, banks should leverage advanced analytics. They can then collect insights on mass affluent transactional behavior and use the data to identify the most suitable clients, offering them bespoke digital products and services. This will help banks differentiate themselves from competitors that provide more general, “one-size-fits-all” mass affluent offerings.


Reliability breeds loyalty: Millennials and Generation Xers tend to have a negative perception of the financial services industry and do not fully trust their advisers. Many of them are savers who didn’t inherit their wealth and want to invest for the future; they care about their money and want their bank to genuinely understand them and be transparent.


A trusted relationship between the bank and client is the critical asset, even more than the product itself. Integrity, transparency, and personal services create intimacy to secure mass affluents’ loyalty.


Watch our webinar, Using AI and Intelligent Process Automation to Engage Emerging Affluent Clients

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Written bySilvia SegaleProduct Marketing Specialist, Appway