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Writer's picturePhil Sanday

The Millennial Misconception - Conclusion

As I mentioned in the introduction of this report, I did not set out trying to form any firm conclusions. My intention was to thought provoke on an area that needs more focus as to why rather than how. Which is why data enablement might be a significant contributor, indeed a catalyst, to achieving this. I included research both recently published and some that is a few years old. There is a lot more out there, some of which might be considered contradictory. That should be expected given the topic of understanding human behaviour. Again, another reason why data enablement has such potential.


To attract new investors, managers who can leverage data to reveal trends and insights such as buying behaviour, investment trends, savings habits, social engagement, and so forth could in theory derive predictive models that open the opportunity to develop tailored products and experiences that might resonate far more with an audience than anything today. The insight could additionally feed into comprehensive educational platforms to give the would be investors the insight and understanding into the type of affordable investment plans to meet their financial circumstances and resonate with their life choices.


Relentless focus on customer experience

Providing a digital experience, rationalizing costs and educating potential young investors must be part of the long term strategy for managers if they are to continue to succeed. Today, managers already sit on a significant amount of data. That needs to be sliced and diced to better inform as to how a manager can make better investment decisions, lower its operational costs, improve distribution and general marketing strategies, and above all significantly enhance customer experience.


There is however a side of caution. From a regulatory perspective, it is important to ensure that data is extracted and used in compliance with relevant laws. The introduction of the General Data Protection Regulation (GDPR), for example, heightened the focus on appropriate data use.


Data ethics is a key concern not just with governments, but society is becoming increasingly aware of the dangers of data misuse. There are a number of examples that point to the significant reputational and market impact that can result it. Following the Cambridge Analytica scandal, actions on Facebook such as likes, shares and posts dropped by almost 20% according to the business analytics firm Mixpanel, as the trust in the social media platform dropped.


Awareness of how personal data is being used has grown significantly making many more wary about what they want to share online. This may also explain why social media was not a primary source of advice, according to the Calastone report discussed in previous parts of this report.


What is deemed ethical by individuals can vary. As an example, if a proud new parent posts to friends through social media announcing the birth of a child, is it ethical for the transfer agent to inform the wealth manager of this post and suggest marketing a trust fund to that individual? The data is technically not being shared outside two parties with a non-disclosure agreement in place and their actions are focused solely on the impacted individual. But would this be deemed ethical by the new parent that an organization is taking advantage of a personal celebration? Is it an unwelcome invasion of privacy? While views on privacy will vary, these are the types of questions that need to be addressed when looking at data enablement strategies.


What does the future hold?

So where do we go from here and how far will we get? Who are the managers of the future? Perhaps Alexa or Siri? While there is value in personal experiences, traditional distribution channels are being disrupted, including closures of bank branches which are being replaced by online interactions. Will Amazon and Google enter and takeover the world of financial services or at the very least partner with one of the global banks to reach that objective.


How far will predictive analytics go leveraging data? In 2012, Amazon filed a patent for an algorithm-based system that could conceivably ship products before its customer has even placed an order. The patent summary describes a method for shipping a package of one or more items “to the destination geographical area without completely specifying the delivery address at time of shipment,” with the final destination defined on route. The benefit of such a system could increase sales and potentially reduce the shipping, inventory and supply chain costs. According to the patent, the forecasting model uses the data from previous Amazon activity including time on the site, duration of view, links clicked and hovered over, cart activity and wish lists.


If you consider that with today’s technology changing behaviours, it is not unrealistic to foresee that at some stage many financial discussions and even investment advice will be through AI. However, their success will ultimately depend on the right data being fed by a data-enabled, insights-driven, investment community.


While we are not yet at a point where investments are being made before a client has made the commitment, assuming all the appropriate data is available, this could be an outcome as predictive technologies advance.


If the forecasts for millennial inheritance (average age 61) comes to fruition, it is likely that Gen Z may gain more than their parents ever did. However, there is a constant that runs through all the research papers mentioned in this report which is social awareness. Wealth accumulation is not viewed as the only or main factor in a millennials success measurement. Will this intensify as Gen Z enters the workplace? If you consider that some of the younger Gen Z’s (yet to be born or in infancy) will embark on careers and into jobs that have not even been invented yet, it is a question that cannot be answered.


The investment industry will still be flourishing in a decade’s time, but it is likely the firms (together with expected new entrants) will be unrecognizable to what they are today. Furthermore, it is not inconceivable that the type of investment classes on offer will be significantly different to what exists today. While there is an expectation that the focus will be upon ESG, there is also the matter of subscription thresholds, overcoming concerns of lower redemptions, and a client experience that looks significantly different.


The digital age has arguably only just started and the potential for great advancements to society is significant. The funds industry is the backbone to maintaining the prosperity of citizens around the world. It is therefore vital the changes required to educate, encourage and assist in investor’s long-term financial prosperity is viewed as a priority to ensure the industry remains important.





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