Self-directed firms need to improve services if they want to keep millennials

By The IJ Staff | June 20 2019 05:30PM

Investors are more or less satisfied with self-directed investment firms, but they’re missing the mark with millennials when it comes to digital, according to a J.D. Power report.

In fact, states the report, some 27% of younger investors are considering switching providers in the next year.

The study indicates that when it comes to interactions with their financial institution, millennials are more likely than older investors to rely on mobile technology to engage with investment firms and to use mobile much differently than boomers.  While boomers favour tablets, millennials rely on their phones for a wide range of transactions that go well beyond trading and checking account balances.

Younger investors want seamless experience

“Millennials are expecting a seamless digital experience, regardless of the platform,” said Michael Foy, senior director of Wealth & Lending Intelligence at J.D. Power.

“The expectation of young investors is to have a mobile experience that offers full functionality to do anything they can on the website, whether that means executing trades, transferring funds, reviewing their portfolio, or even using tools. Financial institutions that want to build loyalty with this critical segment need to improve the customer experience to reflect investors’ priorities and expectations.”

According to the study, millennials averaged just 20 online interactions over the past 12 months compared with 35 interactions among boomers. Some 80% of millennials who execute trades use their phones to transact, compared with 47% of boomers.

Many self-directed investors unclear about services available to them

Still, just 30% of millennials and 29% of overall investors indicate they completely understand what mobile features and services are available to them, representing a big opportunity for firms to drive greater engagement, said J.D. Power.

The study also indicates that more people are understanding fees, which has increased considerably since 2015, perhaps in part due to CRM2-mandated disclosures. In 2015, just 34% of self-directed investors in Canada indicated they “completely” understood fees vs. 50% in 2019.

But there is a significant gap in complete understanding between millennials (34%) and boomers (58%) that likely accounts for lower fee satisfaction among millennials.

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