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From Entitlement to Enlightenment Many millennials came of age during the ‘Great Recession,’ which altered their perspectives on consumerism and money management. Financial services marketers now are working to attract this digitally savvy but debt-laden and risk-averse demographic.

By Christine Birkner | senior staff writer

 cbirkner@ama.org

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T

he “greatest generation” grew up without two nickels to rub together and then spent the rest of their lives making carefully considered purchase decisions. Many baby boomers hit their career stride in the prosperous 1980s and didn’t stop to worry much about saving for the future. Gen Xers took on burdensome student loans in the hopes of entering the workforce with a leg up on their peers. And millennials? The term often associated with today’s teens’ and twentysomethings’ financial understanding and worldview is entitlement—or that used to be the case before they watched their parents’ savings, and their own economic opportunities, diminish during the recession.

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Generational perspectives and approaches to consumerism often are shaped by the state of the marketplace when the consumers come of age. For today’s teens and twentysomethings, while they might have spent the majority of their childhoods in relative prosperity, they’re entering college and the workforce on the heels of the most significant recession since the Great Depression. Their concepts of saving and wealth management differ from those of their parents’ generation, which poses a unique challenge for financial services marketers: how to attract a debtladen and risk-averse audience with more access to information than ever before, and the digital and social skills to find it and share it.

Early Wake-Up Call

The entitlement label was applied early to the millennial segment. Many in the generation are fortunate enough to have been amply provided for from the start. Their baby boomer and Gen Xer parents are the helicopter parents who attempted to meet every need and fulfill every desire. But many millennials now are entering—or trying to enter—a workforce still hampered by the ramifications of the recent recession, and reading headline news about the perils of oppressive student debt, the more stringent parameters for getting a mortgage and the reality of one day having to fund their own retirement. “The financial crisis of 2008 … really shaped how millennials think about how to invest,” says Kevin Rose, principal at Monitor Deloitte, a strategy practice of Deloitte Touche Tohmatsu Ltd., a U.K.-based consulting firm with U.S. headquarters in New York, who specializes in customer strategy for financial services firms and is the author of Deloitte’s report “A New Breed: Opportunities for Wealth Managers to Connect with Gen X and Y.” “For baby boomers, there’s a nostalgia opportunity. Wealth management firms can hearken back to a better time. If I’m a millennial, I don’t have a ‘better time’ to reference. Financial advisors who are marketing to millennials need to take that into account.” Although the markets have bounced back— hitting record highs in January 2014—millennials are determined to avoid the dire financial straits that their parents experienced during the recession. “In some ways, the recession has been a spur to provide additional impetus to save because they’ve seen their parents get their nest eggs cut in half and be working 10 years longer than they expected,” says Mich Bergesen, global director of financial services at Landor Associates, a New York-based global branding firm. “Clearly, they don’t want that to happen to them. This generation wants to take responsibility.”

Most millennials actually are more responsible about investing than previous generations, research shows. Forty percent of millennials, versus 25% of baby boomers and 25% of Gen Xers, are determined to pass wealth along to their families. And 44% of millennials say that they’re extremely interested in improving their understanding of financial products, compared with 38% of baby boomers, according to a 2013 study by Dublin, Ireland-based management consulting firm Accenture. Millennials also are less willing to take financial advice at face value, says Christopher Lucy, a partner and managing director of Accenture’s wealth and asset management services group. “The financial downturn in 2008 created a fair amount of skepticism and confusion in the generation of millennial investors. This generation is looking to have input in their decisions, versus trusting a wealth manager or an advisor simply because of their tenure or title.” In fact, only 19% of millennials believe that financial advisors always act in their clients’ best interests, according to “Millennials and Money,” a 2013 report by New York-based Merrill Lynch Global Wealth Management.

First Steps to Solvency

For many millennials, the first step toward taking responsibility for their financial futures is getting a handle on student debt. Therefore, Springfield, Mass.based Massachusetts Mutual Life Insurance Co., which offers IRAs, mutual funds and other investment products, targets millennials with debt-focused messaging such as a recent Facebook campaign called “Down with Debt.” The campaign, which ran in January and February 2013, asked people to submit ideas for how to manage student loan debt and develop good financial habits, and awarded the winning entrant $20,000 to help pay off his student loans. Mass Mutual also posted “starter” tips for investing on the contest’s Facebook page, including making a budget, delaying luxury spending, using cash instead of credit, researching student loan payment options and starting a 401(k). Mass Mutual received 9,300 submissions, and posted 20 submissions on its website and Facebook page to share peer-to-peer ideas for saving and investing. “We could never bring the creativity and passion to that content that somebody who’s sitting there with the debt coming in their mailbox every month [could],” says John Chandler, the company’s CMO. “It also allowed us to offer something that’s very important when you market to millennials: free information. To them, credibility is who gets the answer first. Content leads to confidence and knowledge that makes them comfortable with going through the process of talking with our

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advisors. We’re not doing a social media campaign just because social media is popular. We want to use it appropriately to engage and motivate millennials to do the things we know they should be doing, versus putting out things that annoy them because we’re interrupting their social media experience.”

“The more firms can enable advisor-client collaboration through digital channels, the stronger the connection will be.” Christopher Lucy, Accenture

From Stodgy to Social

Millennials are inarguably the most social-media-savvy generation, so many financial services firms are working to break down their once-stodgy images to make their brands and offerings more accessible. “The more firms can enable advisor-client collaboration through digital channels, the stronger the connection will be. The highly interactive capabilities that they’ve come to expect from other industries are also how they want to communicate with their advisors,” Accenture’s Lucy says. Omaha, Neb.-based TD Ameritrade launched a millennial-friendly social media campaign in December 2013 called #ItAddsUp. The campaign features seven athletes sponsored by TD Ameritrade for the 2014 Winter Olympics in Sochi, Russia, as well as seven “next-generation” Olympic hopefuls for the 2018 Winter Games. Each time someone tweets using the hashtag #ItAddsUp, TD Ameritrade adds funds to brokerage accounts set up for its next-generation Olympic hopefuls to help them pay for training and other expenses associated with getting to the games. The campaign’s microsite includes athlete profiles, links to TD Ameritrade’s investment guides and a sweepstakes to win a trip to the 2016 Summer Olympics in Rio de Janeiro. TV spots for the campaign, which aired on NBC stations before and during the Sochi Olympics and on TD Ameritrade’s YouTube channel, feature clips from home videos of current Olympians, in reverse chronological order, to show how gradual steps helped them get to the Olympics. The ads explain that TD Ameritrade can help its clients achieve their financial goals by using a similar philosophy. The

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campaign also was advertised on TD Ameritrade’s social media channels and in posters in its bricks-and-mortar locations. As of February, the #ItAddsUp hashtag was mentioned 30,000 times. “We’ve heard time and time again that retirement and saving is intimidating and overwhelming to people,” says Dedra DeLilli, director of social media marketing and sponsorships at TD Ameritrade. “For an athlete, the journey to the Olympics is about taking small steps to reach their goals. It’s about marginal gains that they take. It’s the same thing for an investor, and we think millennials can relate to the 2014 athletes and the 2018 hopefuls. We’re trying to take the intimidation factor out of investing and let people know that it’s never too early to start. We do a lot of research to understand where millennials are, what messaging resonates with them. We’ve found that they’re in social media, so that’s a great avenue for us to reach them.” TD Ameritrade’s other millennial-friendly social marketing efforts include partnering with Likefolio, a website where users log in with their Facebook accounts to read about investing concepts and see which brands their Facebook friends are talking about. The brands are then broken down into equity investment opportunities on TD Ameritrade’s website. “We’re trying to come up with creative solutions that really speak to millennials, knowing that we would like to build a long-term relationship with them and grow with them,” DeLilli says. The company also sponsors a program, TD University, through which it works with more than 70 universities to help professors incorporate trading into their lessons and let students learn the basics of trading online with paper money. “Getting that into the curriculum early gives millennials more of an opportunity to integrate that into their everyday life,” she says. Such campaigns are effective because millennials often look to their peers for guidance, Monitor Deloitte’s Rose says. “If an advisor were to suggest different ideas to millennials, one of the first things that a millennial might do is turn to their peer set. If their peers aren’t doing similar things, it’s harder for them to take what the advisor’s offering to them on faith. As a marketer, and a wealth manager, in general, you have to give them enough space to make their own decisions. If you push too hard or you’re overly aggressive, that becomes a big turn-off.”

Tailoring Your Portfolio— and Your Pitch

Given millennials’ social and digital orientation, conducting online research is second nature to them. Millennials are more likely than previous generations to do their own research regarding investment opportunities. For investment products, 44% percent of

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Investing for When it comes to investing, millennials aren’t just one of the most skeptical and savvy generations. They’re also one of the most socially conscious. “Millennials believe strongly in community, in seeing things that don’t just benefit themselves but the broader world around them,” says Kevin Rose, a principal at Monitor Deloitte, a strategy practice of Deloitte Touche Tohmatsu Ltd., a U.K.based consulting firm with U.S. headquarters in New York, who specializes in customer strategy for financial services firms. “For wealth managers, offering products that are socially conscious, products that have a bias toward community service or making the community a better place, will inspire trust and confidence.” San Francisco-based investment firm Sonen Capital helps its customers invest in companies that are dedicated to solving social and environmental challenges, and in recent years, their 20- and 30-something client base has grown, says Raul Pomares, senior managing director at Sonen Capital. “Historically, the idea of investing has been about, ‘How much can I make?’ often without regard to others, or, ‘How much money can I make by screwing others?’ If you look at Gordon Gekko in Wall Street, or Leonardo DiCaprio in The Wolf of Wall Street, that’s been the image. That attitude is at odds with the millennial generation, which is all about helping people. Social impact investing brings together millennials’ ability to have a positive social impact with something that’s fundamental and practical: the need to invest and make money.” Sonen Capital takes an inclusive, collaborative tack when appealing to millennials, Pomares says. “Our process and approach … is one of collaboration, partnership, education, giving them a voice. It’s an engaging process of asking a lot of questions to understand what matters to them, so when we come back with investment solutions, we’re providing solutions that are not only consistent with the traditional riskreward process that most people go through, but that are also consistent with targeting the specific issue areas that a given client has with regard to the kind of social and environmental impact they want to have.” The most popular social impact investment opportunities among millennials are related to climate change and water and energy conservation, according to Pomares. “They’re waking up to the fact that doing more with less makes sense. The notion of being more efficient with food, water and materials are all things they’re focused on. The other is inclusion, overcoming massive social disparities in communities.” Millennials also are inclined to invest more in publicly traded companies that do good work, says Michael Liersch, director of behavioral finance at Merrill Lynch & Co. Inc., and author of its report “Millennials and Money.” “Younger investors frequently come to us with ideas about values-based investing and screening investments according to values. They’re bringing those values and that philanthropy into their investment strategy to save for retirement, and they’re very passionate about it.”

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“As a client, I’m not worried if you’re using ETFs or annuities, or hedge funds or whatever. I’m more worried about whether it will take care of me in the long run.” Warren Cormier, Boston Research Group

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millennials spend time researching alternatives before making a purchase decision (vs. 37% of Gen Xers and 33% of baby boomers), and they are four times as likely as baby boomers to be unwilling to take the advice of a financial advisor without first consulting other sources, according to Accenture. To get relevant content in front of millennial audiences in search of information, TD Ameritrade redesigned its website in 2013 to allow for a more personalized user experience, including user logins and personalized advice based on individual investors’ portfolios. “We did quite a bit of research across all our segments to understand what people are looking for. The more customized people can get, the better,” DeLilli says. Offering customization and personalization mimics the customer experience that millennials have come to expect from other industries, Lucy says. “The expectations for the end clients are being driven by digital experiences they have on Amazon or on their airline’s website. The services they’re buying from a financial services firm are very different, but the way they expect to open an account and buy services and products are being driven by that retail process of other industries, so firms should redesign their processes to enhance that.” Bergesen agrees. “The entire culture’s offering the digital generation control, on the go. Their websites should follow the ease of use of an Uber or an Instagram.” Pittsburgh-based PNC Financial Services Group Inc. takes a similar approach with its content. In summer 2013, PNC launched PNC Achievement Sessions, an interactive website that teaches visitors how to achieve their financial goals including saving money, planning for retirement and buying a first home through “sessions” taught by financial experts that include videos, interactive quizzes and Q&As. Some session instructors have faced financial difficulties, themselves, such as Anna Newell Jones, whose blog And Then We Saved offered a “Spending Diet” plan based on her own experience of paying off almost $24,000 in debt in 15 months. “A lot of the content out there assumes that financial education alone will drive better decisions,” says Deborah Van Valkenburgh, senior vice president of strategic brand management and corporate marketing at PNC. “It doesn’t make it relevant to other decisions in your real life. We want the user to see themselves in the story, to see where their blind spots are. [The achievement sessions] helped us differentiate and enhance our brand, and give customers and prospects a reason to engage with us beyond a product offering, to deepen the relationship, to show that we’re more approachable.” Approachability is crucial in appealing to younger generations, Bergesen says. “There needs to be some coaching combined with the tools. You can’t just put a website up. It has to sound personable. Even if you’re doing it online, it’s got to sound like someone who’s coming from Brooklyn, not like somebody who’s coming from Wall Street.”

Trust(ing) Funds

Financial firms are finding success in positioning themselves as support services to enable millennials to achieve their financial goals when they’re ready, says Michael Liersch, director of behavioral finance at Merrill Lynch and author of its “Millennials and Money” report. “Millennials are really interested in working with somebody who understands them and their own set of circumstances at their life stage. They want to work with someone who can answer their questions. Having best practices for saving for retirement or for buying a first home says, ‘We understand someone like you and we have an organized foundational principle for you to think about in your life stage.’ ” Rose agrees: “For the next generation of investors, you have to give them the opportunity to understand for themselves, to explore, to make their own decisions and give them something to sink their teeth into so they can ask questions about it to their peers and family. Then they’ll turn to the advisor and say, ‘Let’s talk.’ If you’re the company that’s offering that education, it puts you in a great position when they ultimately make the decision that they want to invest.” Moreover, given the financial instability that they’ve witnessed or experienced, millennials want reassurance that they’ll be protected no matter how volatile markets become in the future, Liersch says. “Marketers should acknowledge that investing isn’t a smooth path. Acknowledge that times have been volatile and difficult, but help them talk about it and find a constructive way forward. There are ups and downs, and there are certain investment risks that have more severe consequences than others, and some that can grow more quickly than others, but there are trade-offs involved. Being transparent about those trade-offs can go far in building trust with the millennial generation. When you’re speaking to a young person who has no other experience except watching their parents deal with a troubling market, being empathetic, as a marketer, can be a huge win.” Adds Warren Cormier, president of Boston Research Group, a Woburn, Mass.-based market research and consulting firm that specializes in the financial services industry: “Focus on the customer experience and what will happen as a result of the plan they’ve created, that they’ll be secure no matter what happens to the markets. As a client, I’m not worried if you’re using ETFs or annuities, or hedge funds or whatever. I’m more worried about whether it will take care of me in the long run.” m

•com For more on financial services marketing, visit MarketingPower.com/MarketingNews.

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From Entitlement to Enlightenment