Millennials have long presented a puzzle to financial advisors, and for good reason. On the one hand, we have a 75-million strong generation that is better educated, more diverse and more active than its predecessors. On the other hand, much of the Millennial crowd is not all that appealing to a traditional financial advisor.
According to a recent study by PricewaterhouseCoopers titled "Millennials and financial literacy: the struggle with personal finance", 81% of college-educated Millennials carry at least one long-term debt and the limitations do not stop there.
The study goes as far as to define Millennials as "financially fragile". If an unexpected $2,000 expense came up, nearly 50% of Millennials do not believe they could come up with the extra money. A part of the problem is the uncertain job market of the recent years. Millennials have been stuck trying to compete for limited job openings along with the more experienced professions hurt by the recession and baby boomers who cannot afford to retire.
The other part of the problem is the gap in financial education. There is no nice way to put it: Millennials as a group make poor financial decisions. So, we've got a large generation of debt-laden and financially uninformed future clients. What's the financial advice industry to do?
Dynamic Content Drives Millennials' Decisions
The Millennials' hunger for content was the subject of the Innovations in Content session at the recent In|Vest 2016 conference in New York. In a panel moderated by Chelsea Emery, Editor-in-Chief of Financial Planning, several industry experts shared their observations on the rise of content marketing and the future of robo advisors.
- Jennifer Barrett, Chief Education Officer, Acorns
- Wayne Gomes, Co-founder, Grapevine6
- Kristi Ross, Co-CEO and President, dough Inc.
The drive for educational content makes a lot of sense in light of the financial knowledge gap. The PwC study highlighted that only 24% of the Millennial participants could demonstrate basic financial literacy – the lowest score of any age group. Their financial decisions reflect that knowledge gap: 53% are carrying credit card balances, and nearly 30% routinely overdraw their checking accounts.
Part of the solution has to be providing this generation tools and knowledge to dig out of the financial hole. Gomes observed that online content is the new currency of marketing. Millennials consume videos and other visual materials like infographics and share them enthusiastically within their social networks. Advisors could and should be using them to reach the younger crowd and build trusting relationships.
Video content is desirable and sharable
Video content is a trend worth noting. Ten years ago, YouTube was primarily homemade clips and cat videos. While there are still plenty of cats out there, YouTube is now a legitimate resource for learning as well as entertainment. I have personally resorted to videos when stumped by tasks like replacing my car battery, learning to play the guitar or applying a data analysis formula in Excel. And I am not alone: according to Ross, 2/3 of Millennials believe they can find anything they need to learn online.
In 5 years, Facebook says most of their content will be video -Barrett @Acorns #Invest2016
Ross has found that video can be a great tool for taking complex and technical content and turning it into bite-sized digestible stories. Here is a list of ingredients of a great video, according to Ross:
- Keep it brief
- Educational, with clear actionable takeaways
As advisors look to create content for the millennial audience, this checklist can be a useful reminder for videos and blog posts alike. There is however a downside to this recipe: original content can be time-consuming to create.
Production + Compliance = Bottleneck
The reality of the daily demands on advisors is that they simply don't have the time to consistently curate and create content. The problem is made worse by the compliance departments that do not have the capacity to work through submitted content quickly enough. As a result, most advisors make a haphazard effort in this arena. As a result, their impact is far from optimal.
Technology enables content customization at scale -Gomez @Grapevine6 #Invest2016
You do not have to hire a team of content generators and marketers to solve this puzzle, Gomes stated. His firm's flagship product, Grapevine6, is a technology solutions that can help scale and automate content marketing. It uses custom algorithms to locate content and optimize social media posting. This eliminates the time-consuming work involved in searching for the best articles to share. As clients look for meaningful content to inform their buying decisions, advisors who are consistent in their efforts stand to grow the most. (See 5 Ways Grapevine6 Can Jumpstart Advisors' Social Media Marketing)
Advisors should look at similar tools to automate their video production. Ross shared a tip about a program called Wibbitz, which can create high-quality videos from text in a matter of minutes. Anyone who dreads setting up camera and lighting and spending hours on multiple takes and editing, this could be a game-changer!
Wibbitz uses a natural language processing algorithm to follow the written story, summarizes it into a script, and selects visual elements to accompany it from your own image bank or a library of licensed content. A brand new video in a span of 10 minutes is something most advisors can easily fit into their week.
Can Content Drive Behavioral Change?
Great content is only part of the answer. Jennifer Barrett of Acorns is accurate in her comment that there is no shortage of good content on the Internet. However, we keep seeing the same headlines in the news and studies seem to highlight the same set of problems. All this education is not changing client behavior.
The solution, in Barrett's opinion, is at the intersection of technology and content. The partnership between Acorns, a popular automated savings app, and the financial education website Grow are good examples. (See Why Acorns is the Only Roboadvisor That Could Be Worth $1 Billion)
Acorns started out as a stand-alone app with the idea of micro-investing. The app allows users to invest spare change from everyday purchases. By eliminating the barrier to entry and making it easy to start investing, the app has accumulated an impressive following (user count could reach 2 million by the end of 2016). With Millennials as the primary target users of the app, the educational content component was key.
Enter Grow, an editorial personal finance site. The goal of Grow is to offer good financial advice in user-friendly packages. The website is quasi-independent from Acorns, a structure that moves it out of the compliance restrictions and allows editors to experiment and have fun with the format.
The next step for the Acorns-Grow collaboration is behavior tracking. Barrett's team is working on a way to link and measure the impact of educational content on user behavior. Does reading articles about long-term investment focus actually help account holders remain calm when the market hits a bump? Time will tell. (See Wealthfront Revs Up With AI, But Is Still Running on Fumes)
Content and Apps Working Together
The main takeaway from the Innovations in Content session at In|Vest 2016 is that digital content is proving to be a key decision component from, Millennials, from the financially fragile ones to the more affluent.
As a result, advisors cannot afford to ignore content marketing. Acorns and Dough are generating their own content to attract new customers to their services. While apps like Grapevine6 and Wibbitz make it possible to scale and get consistently good content with minimal time investment. Grapevine6 comes with the added benefit of an automated compliance check, which is intended to shorten the time to publish and avoid process bottlenecks.
The answer for reaching the hearts and the wallets of the younger generations is at the intersection of technology and targeted content.