Wealth managers can teach young investors

By The IJ Staff | June 26 2020 02:00PM

Photo: Freepik

Wealth managers should reach out to new Millennial and Gen Xer investors to build long-term relationships and help them avoid taking steep losses during COVID-19, says data and analytics company GlobalData.

So far, Millennials, and to a lesser extent Gen Xers, have been rushing into financial markets to capitalize on the steep increase in volatility as they adjust to COVID-19 disruptions, says Heike van den Hoevel, senior wealth management analyst at GlobalData.

Could make significant losses

“Considering their age, many are unlikely to be seasoned investors, and given the ongoing volatility, any attempt to time the market for quick profits has the potential to result in significant losses,” he said. “Should this be the case, these investors are likely to cop their losses and terminate their account, effectively ending what could have turned into an advice relationship further down the line.”

Investment platforms are reporting a strong rise in account opening numbers. Many of these consumers will be first-time investors. Information from GlobalData suggests that recent investment account openings have been dominated by the Millennial segment.

Many new accounts opened by Millennials

However, on the flipside, the recent spike in account opening represents a significant opportunity, and now is the time to reach out to the Millennial investors segment to create goodwill.

New investor support, such as introductory training and education sessions with a particular focus on risk and return, will be critical to ensure the longevity of a new relationship, says GlobalData.

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