Winning Affluent Millennials

Editor's Notes

1. Speaker Notes: Thank you for joining us today to review the Global Affluent Millennial Research Study.
2. Speaker Notes: About the Study In April of 2015, LinkedIn and Ipsos conducted an online survey of 9,200 Millennials and GenX Internet users across 10 countries. This report focuses on data gathered from a subset of 1,575 individuals from across the United States. The 20-minute online survey measured respondent usage of and engagement in financial service offerings, as well as their attitudes and opinions about the finance industry.   About the Sample Population The study targeted Millennials, which are defined as individuals born from 1981 to 1997, and GenXers, which are those born 1966 through 1980. The study further broke down these generational groups into subgroups to call out affluent members, which refers to those living in households with investable assets in excess of $100,000 (excluding real estate).
3. Speaker Notes: Study Objectives The study set out to gain greater understanding of Millennials, particularly: The differences between Millennials and GenXers with regard to brand affinity, purchase process and information-gathering. The role that social media plays and the influence that content and context has on the decision journey for retail financial products. The unique mindset, behaviors and expectations of the Affluent Millennial subset.
4. Speaker Notes: This study is broken up into 3 sections: How Affluent Millennials envision the future of the finance industry How Affluent Millennials are preparing for their future today How financial services providers can build long-term relationships with this audience. Here are the top 5 key findings. Affluent Millennials are.... Eternal optimistic Control freaks Open Minded Social-centric AND Hungry for educational info Now I will pass it to Emily to deep dive into these 5 key findings anchored around the 3 categories.
5. Speaker Notes: Affluent Millennials believe the future of the financial industry will be very different from how it is today.
6. Speaker Notes: Here is how Affluent Millennials envision the future of the finance industry. Affluent Millennials are more likely to think that there will be automatic debt paydown through earnings, banks will no longer be their primary financial institutions and social network accounts will be the hub for financial info Survey Question: FUTURE_FS_RELATIONSHIP Thinking about the future, that is, 10 years from now, which of the following do you think we are likely to see?
7. Speaker Notes: Affluent Millennials in Australia are less likely to expect another financial crisis to occur, and they are also are unparalleled in confidence compared to Affluent Gen X and Millennials overall. While many anticipate another financial crisis, Affluent Millennials are significantly more likely to be confident in future economic growth – more than twice as likely compared to Affluent Gen X -- and one in four believe the Australian Dream* is definitely possible. AMERICAN_DREAM The American Dream is typically defined as the ideal that every individual should have an equal opportunity to achieve success and prosperity through hard work, determination and initiative. Survey Questions: Is this ideal alive and possible today? OPTIMISM How well do you agree or disagree with the following statements?
8. Speaker Notes: Affluent Millennials believe that their future success depends on the decisions they make now Survey Question: OPTIMISM How well do you agree or disagree with the following statements?
9. Speaker Notes: With the type of sacrifices Affluent Millennials want to make in the future, they set ambitious goals for their lives. We see common goals like getting married or having children vary more by life stages, but Affluent Millennials in general tend to be more ambitious. As an example, Affluent Millennials are more than 2x as likely to have a life goal to start a business (26% vs. 11%). Survey Question:: CURRENT_GOALS People often have both long-term and shorter-term goals, both personal and financial. Which of the following are current goals for you?
10. Speaker Notes: We also see this ambition exemplified in the greater likelihood Affluent Millennials have to travel internationally for education, or for a ‘gap year’ break in their education. Affluent Millennials are more likely to have already traveled abroad for either reason, as well as more likely to plan to do so in the next few years. TRAVEL_NONNAMER: Whether plan to travel - Travel overseas for further study/ education TRAVEL_NONNAMER: Whether plan to travel - Travel overseas for a 'GAP' year
11. Speaker Notes: So how are Affluent Millennials starting to achieve all of these goals... Let’s look at how Affluent Millennials are preparing for their future today...
12. Speaker Notes: The way in which these groups are acquiring their wealth is shifting across generations. Employment wages are losing dominance as the primary source of wealth. Affluent Millennials are: 3.4x more likely to have gained their assets from inheritance (note massive intergenerational wealth transfer taking place from boomers) 2.7x more likely to have gained their assets from their family’s business OR 2.5x more likely to have gained their assets from a superannuation (note: could be inherited) Survey Question: SOURCE_WEALTH Which, if any, of the following are sources of your accumulated investible assets?
13. Speaker Notes: Another way that Affluent Millennials are acquiring their assets and managing their life goals is by taking out loans. Affluent Millennials are significantly more likely to have products that put them in debt. They are willing to finance their endeavors to reach their goals. So tying in with the entrepreneurial goals we saw earlier, they are 19x more likely to have a business loan. They are also 4x as likely to have a personal loan. When it comes to student loans, while Affluent Millennials and Millennials are equally likely to have them, similar to the US, but unlike the UK where far fewer affluents hold student loans. Survey Question: ACCT_TYPE How many of each type of account do you currently have in your household?
14. Speaker Notes: But at the same time, Affluent Millennials are also very successful at saving – and they save a lot of their personal earnings. So one in three Affluent Millennials save the majority of their paycheck/monthly compared to 18% of Affluent Gen X. Please note: While Affluent Millennials are saving a large part of their paycheck, as mentioned in the pervious slide, they are taking out loans to pursue their future goals. The reason for the savings and taking loans is part of Affluent Millennials greater finance strategy since there are lower rates to take out loans today. Survey Question: PAYCHECK How much of your personal paycheck do you typically save per month?
15. Speaker Notes: So how are Affluent Millennials managing the assets they have acquired? Affluent Millennials are on par with Affluent Gen X when it comes to owning a brokerage account – just under a quarter of each group. This is similar to the UK, but much lower than the US (about half). However, when we look at Emerging Affluent Millennials ($25K-$100K in investible assets) only 1 in 10 has a brokerage account, highlighting the importance for financial institutions to build relationships early as Millennials grow their wealth, as more of the wealth transfer occurs and Emerging Millennials become affluent. Notably, 40% of Affluent Gen X and 30% of Affluent Millennials has more than one retirement account – indicating that they likely have opened an account in addition to their government superannuation. Survey Question: ACCT_TYPE How many of each type of account do you currently have in your household?
16. Speaker Notes: In terms of how Affluent Millennials are managing their money, they are seeking greater control and involvement in their financial decisions. Definitions: Validators: Conduct their own research and investment decision Soloists: Perform their own research, make decisions and execute trades Survey Question: INVEST_PREF When it comes to making decisions about your investments, would you or do you prefer to research and make choices on your own or do you prefer to consult with an advisor?
17. Speaker Notes: But despite Affluent Millennials’ tendency to do their own research and seek information on financial decisions, Affluent Millennials are significantly more likely than Affluent Gen X to see value in having a financial advisor. This was more significant in AU compared to US, UK. Survey Question: CURRENT_PRIORITIES: When you think about the kind of life you want to live in 2015, how do you prioritize the following?
18. Speaker Notes: Once Affluent Millennials are a customer, they are highly loyal to their financial institutions. It is important for financial institutions to start building relationships with millennials early on. While the majority of both audiences would be willing to take their business elsewhere if presented with better solutions, Affluent Millennials are more likely to say they are VERY loyal and plan to keep their business with the financial institutions they work with. Questions: Survey Questions: ACCT_LOCATION Are each of your accounts in the same company / institution, or across different companies? FS_LOYALTY Thinking about the financial services companies you use, overall, how loyal do you feel toward them?
19. Speaker Notes: This loyalty is no surprise when we see that Affluent Millennials are more likely to trust their financial institutions they work with. Survey Question: FS_TRUST Overall, how much do you trust the financial services companies you use? - % who said level of trust is 50% or higher on a scale of 0-100%.
20. Speaker Notes: But despite the trust and loyalty that we just mentioned, financial institutions need to be aware that Affluent Millennials are becoming more open to financial offerings from traditionally non-financial brands. Survey Question: NEW_PRODUCTS If the following companies offered new financial products and services, which ones would you be likely to try? (list of FS companies and non-FS companies)
21. Speaker Notes: For financial institutions to reach, nurture and deepen relationships with Affluent Millennials, there are certain factors that matter the most when Affluent Millennials are selecting traditional financial institutions.
22. Speaker Notes: When it comes to choosing financial institutions to work with, things we would expect like customer data privacy and low fees are important to everyone, However, social presence and relationship history are uniquely important to Affluent Millennials The top 5 factors of unique importance to Affluent Millennials are: Social presence: company has a page on various social platforms. Mission: Company has a social mission you care about. Influence: members of your family use the same financial institution. Online reputation: Company has positive online buzz. Service: Company has things like online chat for customer questions. Survey Question: FS_IMPORTANCE How important are each of the following features to you when considering financial services companies?
23. Speaker Notes: We see this value on social with 78% of Affluent Millennials considering social networks important, compared to 39% of Affluent Gen Xers. Survey Question: CURRENT_PRIORITIES When you think about the kind of life you want to live in 2015, how do you prioritize the following?
24. Speaker Notes: And on top of that, not only do they see social networks as a must have for their lives in general, they see social as central to their financial decision-making. Affluent Millennials are: 2x as likely to use social networks to inform their decisions AND 2x as likely to use social networks to seek content from financial companies 3.4x as likely to visit FS company’s social networking page Please Note: Social networks have been and will continue to be BOTH a source of gathering financial knowledge AND conducting financial transactions. Example: in Jan. 2015 ICIC Bank, India’s largest private sector bank announced the launch of banking services on Twitter. Known as ‘icicbankpay’ the first-of-its kind service in India enables ICICI Bank customers to transfer money to anyone in the country who has a Twitter account, check account balance, view last three transactions and recharge prepaid mobile in a completely secure manner.   Survey Questions: FUTURE_FS_RELATIONSHIP Thinking about the future, that is, 10 years from now, which of the following do you think we are likely to see? - Social network accounts as the hub of your financial information FS_ACTIVITIES Which, if any, of the following do you personally do? - Visit a financial services company’s social network page SOCIALNETWORK_PURPOSE Below are several purposes you may have for using social networks. - Seek information to make personal finance/investment decisions - Seek content or information from financial companies
25. Speaker Notes: And the top types of content Affluent Millennials are seeking from their financial companies are: Thought leadership or commentary about financial markets/events Educational content about personal loans Expert opinions or commentary about markets/events. Whatever information is relevant to their current financial needs, Affluent Millennials are seeking out that information on social networks – significantly more so than Affluent Gen X. Survey Question: FSSOCIAL_NETWORK You indicated that the following types of financial information are relevant to you. Which, if any, of the below social networks would you use to obtain each type of information? (Net of all social networks shown – LI / FB / Twitter)
26. Speaker Notes: We see all these behaviors come to life on LinkedIn’s platform, when we see how connected and how active Affluent Millennials are - they are sharing twice as much content, but more importantly, they have 13x as many finance topic shares.