I’m going to say something that’s a little controversial.
When it comes to capturing the millennial market as new account holders, perhaps financial institutions are doing it wrong. And perhaps we’ve been going about it the wrong way for quite some time.
First, let’s take a look at the current state of millennial finances:
- In 2017, 46 percent of young millennials (aged 18-24) surveyed by GoBankingRates had no savings, up from 31 percent in the previous year.
- 41 percent of older millennials (those aged 25-34) had $0 in savings in 2017, when 33 percent said they had $0 in savings just the year before.
The other half of the millennial population is doing quite well with their savings, but is hesitant to invest.
- In a recent study by Merrill Edge, 38 percent of respondents stated they save upwards of half of their paychecks
- 54 percent said they were cutting back to build their nest egg
- 42 percent indicated they were postponing vacations in order to save
- When asked what they’ll rely on in 20 years, 66 percent of millennials said “a savings account” instead of a 401k or investment account
Using the stats above, two types of millennials emerge – the wealthy millennial elite and the ones still struggling to get ahead. But no matter the income level, millennials aren’t saving and investing well; and it appears this trend is only getting worse with time. This is frightening, considering that wealth and earning power typically go up with time and age.
These stats could largely be due to millennials’ lack of money confidence. A recent Bank of America study indicated millennials (no matter the amount of money in the bank) don’t believe they’re fiscally responsible.
- 64 percent of millennials say they are not good at managing money
- 73 percent say they overspend on unnecessary items
- 75 percent think they don’t overspend, they just overspend in comparison to other generations
Using this data, it’s easy to see that even if millennials have money (which many of them do) they don’t know what to do with it. So, what can financial institutions do about it?
It’s really very simple. Find a way to provide advice and consultation to those who need it most.
Many of our Harland Clarke blogs provide a handful of tips. For this piece, I’m suggesting the only one that matters: figure out a way to get financial advice and education to millennials.
Not only do they need it, they want to hear from their financial institutions. Thirty percent of millennials value recommendations from their financial institution (this is nearly double the amount of Boomers and GenXers that value banking advice).
While we’ve been worried (and rightfully so!) about using our digital marketing IQ and meeting millennials on the platforms they love to frequent, it appears we’ve neglected a crucial piece of the puzzle, one that’s a bit more, well, old fashioned. Bankers, tellers, and wealth managers have always existed (and still currently do exist) in-branch, but to meet millennials the format needs to change. Perhaps advice is now an online course, or a welcome email series, or a financial expert they can chat with on social media.
Younger consumers need advice and consultation on how they’re going to manage their money. The institutions that can provide value to this demographic won’t have to worry about disruption.