My fourth prediction in my blog series about Financial Services 2015 priorities is about the increased importance Financial Service’s companies will place on millennials. The millennial market is just too large and has too many financial leads to ignore.
Millennials are the most elusive customers for financial services companies to attract, but rapidly becoming a major target market for companies. There are approximately 73 million millennials, and the oldest millennials are reaching the age where they need a wide variety of financial services products from mortgages to retirement accounts. Unfortunately, financial services companies have struggled with attracting these high value customers because of outdated approaches to product distribution and general dis-trust of large companies. Millennials are also one of the first generations entering the workforce with significant debt. Balancing loan payments with other financial obligations is driving spending behaviors across a broad spectrum of purchases.
Millennials represent a huge sales opportunity for all the major providers of financial service products. They have retirement, insurance and banking needs that will need to be satisfied by financial services products, but confusing and old distribution models are creating consumer skepticism. Millennials are digitally connected and are influenced by their social networks. This requires financial services companies to approach the market in a completely different manner than they have with past generations. Forcing millennials to purchase products through one sales distribution model won’t work because millennials quickly adapt to the latest and greatest technology. Staying up to speed with these consumers, will continue to present challenges to traditional financial services companies.
One final emerging trend that will start gaining some momentum in 2015, is the importance companies will place on millennials as they look towards the future of the wealth transfer potential from baby boomers to millennials. Forward thinking investment companies and banks realize that there is huge opportunity in building relationships with millennials now, with the anticipation that these relationships will develop into highly profitable customers as they inherit baby boomer wealth.
On the distribution side of the business, attracting and retaining millennials is also a daunting proposition. For all the same reasons millennials are not attracted to financial services as consumers, they are not attracted to distribute financial service products. It will be critical for companies to get their “digital houses” in order before they can have success hiring and retaining millennials to sell their products.
Over the next year, companies will have to invest in direct-to-consumer channels as one way to attract millennials. Financial Service’s companies will also have to look for alternative approaches for educating consumers on the need for their products. Usage of video and social channels should continue to expand as a way to engage and educate potential consumers. I also see companies developing innovative product solutions that combine college loan risks with other more traditional product offerings like life insurance and retirement solutions. Finally, I think the truly innovative companies will develop and test alternative distribution models that are based on social media communities.
If you find this topic compelling, you will want to check out the Financial Services Study we are conducting around Millennials, which will be ready next month.
Stay tuned for my final 2015 prediction in a few weeks. The prediction is about how mobile will continue to reshape the financial services landscape.
Join me on March 18th for a webinar where I explore how financial services industries can stay relevant to their customers. Register here.
You may also be interested in Tahzoo’s other predictions for 2015.
2015: The Year of? Hint, It’s Not Mobile, Social or Big Data (http://blog.tahzoo.com/2015-the-year-of-hint-its-not-mobile-social-or-big-data/)
Three Predictions For 2015 (http://blog.tahzoo.com/three-predictions-for-2015/)