To reach Gen Y, will financial services firms warm to the web?
In looking at data compiled by third parties, social investing platform SprinkleBit lays out the case that Gen Y is not only eager to invest, it’s more interested than other generations.
Shunned to a large extent by financial firms and money managers, some research indicates that Gen Y-ers are far more optimistic about their ability to profit from their investments. According to one survey, a third of Gen Y-ers believe that “now is the best time to invest”; just 12% of Baby Boomers and 8% of seniors felt similarly.
New marketing required for a new generation?
Given that Gen Y is 12% larger than the Baby Boomber generation if you consider Gen Y to include everyone born between 1981 and 2000, it’s inevitable that Wall Street will eventually have to court this group. And given their optimism compared to more experienced and jaded investors, they may want to do so sooner than later.
But financial firms shouldn’t assume that they’ll be able to win over Gen Y-ers the same way they won over Baby Boomers. Gen Y is far more hands-on when it comes to investing, which makes sense given that, thanks to the internet, members of Gen Y have grown up with access to more information than any generation before them.
As SprinkleBit’S CEO Alexander Wallin observes, “Gen Y has grown up with the gift of ubiquitous information and the ability to make quick, informed decisions from the palm of their hand. This will be the key to financial prosperity for this generation – their ability to find good information and apply it. As Gordon Gekko said: ‘The most valuable commodity I know is information.’ And this is where the younger generations excel — at making connections and finding the information they need.”
While access to significant amounts of information in and of itself isn’t necessarily an advantage, and could even be a huge disadvantage, one thing is clear: as financial firms decide to target Gen Y-ers, they’ll need to recognize that they’re marketing to a different kind of potential customer.
Getting social
With a strong desire to make their own investment decisions, it’s no surprise that social, both online and offline, may be a critical piece of the Gen Y marketing puzzle. According to one survey, for instance, well over half (60%) of Gen Y-ers turn to friends, family and colleagues for financial and economic information.
Unfortunately for the financial services sector, firms are by in large behind the curve in their adoption of social media in all its forms. As Integritie CEO Michael Veenswyk noted in a guest post the other day, regulation and risk management is a big reason why many are less than eager to start blogs and set up Twitter accounts.
But things may be starting to change. The use of a microsite and Google AdWords by a prominent billionaire hedge fund manager in his epic battle to expose a company he believes is running an illegal pyramid scheme suggests that Wall Street is warming to the internet as a marketing platform, and with the Securities and Exchange Commission set to effectively reverse the current ban on general solicitation, it seems all but certain that consumers will be seeing a lot more ads and tweets from financial services firms in the coming years.
