We are at the start of the largest wealth transfer in human history.
The key thing missing from many banking and investment platforms is personalisation
Baby boomers and the silent generation – people born prior to 1965 – own the vast majority of wealth in established markets. But this group is retiring and won’t be around forever – meaning their children stand to gain a huge influx of fixed and liquid assets in coming decades.
These young people – millennials (born between 1980 and 1995) and Gen Z (born between 1996 and 2010) – may not have a huge share of wealth right now, but they will eventually control a large swath of it. Even those who don’t stand to inherit a significant sum will take up a far larger share of the income pie very soon.
That’s why banks, asset managers, investment funds and other financial services companies are currently in a battle to win and retain this generation. It’s the reason BlackRock launched a TikTok this year, and one of the reasons it recently partnered with Coinbase to help institutional investors manage Bitcoin holdings. Older investors have generally already chosen their wealth or asset manager – younger investors are the growth market.
Despite all this attention, many of the most obvious attempts to connect with these younger investors rely on marketing to a cliché or diving into crypto, not on building an investment experience young people actually enjoy.
We all know the cliché: a young man sitting on Reddit’s “WallStreetBets” forum plowing his stimulus cheque into a “meme stock”, both because the internet told him to do it and because it seems funny. When he’s not doing that, he’s busy checking how his wide variety of crypto coins are performing, either pulling his hair out or typing “HODL” into Twitter.
While there are certainly young investors who have put some money into crypto or had some fun with GameStop last year, they are a very vocal minority. Surveys of younger investors show they are far more interested in making sure their investment doesn’t hurt the planet than bringing down fiat currency. And despite all the talk of risky bets on meme stocks, analysis from the UK’s Freetrade found half of the top 10 holdings by investors under the age of 24 were boring old index funds.
These online investing communities like WallStreetBets and #FinTok on TikTok definitely do have serious reach however, with one survey by MagnifyMoney finding that almost six in ten young investors belong to one. These are new investors, and naturally, they want some inspiration, and they want it on the social media platforms they already spend a lot of time on rather than sifting through pages and pages of irrelevant news and analysis. Unfortunately, while this content is usually far more engaging than what you might get from a typical investment platform, it is often doled out by anonymous amateurs.
Connecting with this generation doesn’t mean that financial services firms need to change who they are or what they do drastically by pivoting to crypto assets. That might work for the kind of investor who is keen on crypto, but plenty won’t be.
Instead, firms should take a step back and consider why young people are getting so much investment inspiration from TikTok and Reddit. It’s because the content is tailor-made for them. According to analysis by Sensor Tower, a regular TikTok user has the app open for a whopping 95 minutes a day. Open a TikTok account and it is easy to see why – after a few minutes of liking and watching videos and scrolling past others, the sophisticated personalisation AI algorithm soon works out what kind of content you want to see, and then spits out an endless feed of videos that feel hyper-targeted at you.
Compare this with the average investment platform or a bank’s website or app. It probably has a stock image of someone smiling while thinking about their money, a bewildering array of offerings that may have no relevance to the user in question and a strong attempt to make sure you know about their latest home loan rates.
The array of information is often overwhelming and largely irrelevant when investing on traditional platforms, with generic data, financial records and charts for each company, fund or trust available. This is not an easy way to digest information, and often leaves out what is going on currently or what could happen in future. It doesn’t make any use of the customer’s digital footprint to benefit them and target them with information they might actually want to see.
As a result, these platforms are not destinations anyone would like to spend time on. Younger customers engage with these platforms as a purely transactional experience. And banks themselves seem to see them as digital billboards with some teller services attached.
The key thing missing from these platforms is personalisation. The platforms usually have plenty of data about their customers, but don’t use it to benefit them at all. Most bank users under 25 won’t be worrying about cheques, but the Barclay’s website still has a module on them. On the other side of the coin, many other users don’t want to be offered the latest crypto asset, so will be turned off if that is front and centre the moment they log in.
And this personalisation can be used to offer the new generation of investors exactly what they are finding on other platforms – inspiration and relevant information to their situation. If a customer regularly looks at the share price of Twitter, tweets from Elon Musk are probably quite important to them. If they are heavily invested in energy stocks, political news may be similarly key. And if the user who has never done much investing is about to dump a huge amount of their savings account into a high-risk product, banks and other services should be unafraid of asking them if that is really the right idea. Personalisation shouldn’t just be about selling users more. It should be about making sure that their experience on a platform is a positive one.
No investment platform is likely to overtake TikTok tomorrow. But there is evidence that young investors are far more emotionally invested in their investments than their parents, meaning they do want to stay as up to date on them as possible.
These investors are the future. They stand to own a massive chunk of global wealth and the decisions they make early in their career could stick. This cohort aren’t likely to go out and enlist a real-life broker. But there’s no reason their investment platform has to be a purely transactional tool. Even if there’s no memes.
