Many younger consumers are managing their own finances with the assistance of mobile tools and online platforms available to them. And, Greenwald & Associates’ 2018 Online & Social in Financial Decision-Making study shows that, when it comes to more long-range planning and ideas about their entire financial picture, Millennials are interested in information that would help them make decisions.
Online Money Management Platforms are Used for Day-to-Day Functions.
According to the survey, nearly six in ten (59%) Millennial consumers use money management tools, and these consumers are most interested in using them for banking, credit report monitoring, and budgeting. This is no surprise: the top three tools they use are CreditKarma, their bank’s website or app, and Mint.
Overall, users most appreciate being able to track progress toward their goals (40%), getting budgeting help (35%), and being able to connect accounts to access personal financial information in one place (34%). However, less than one in five think receiving advice from an expert (19%), being able to talk to someone one-on-one about finances (16%), and receiving personal advice (15%) from these tools is useful, as the most heavily-used platforms assist most often with day-to-day financial management.
Younger Consumers are More Willing to Receive Online Advice for Retirement Planning.
Consumers are not looking for long-term personal financial advice through the most popular money management platforms, even though only 34% of Gen Y and Gen X consumers work with an in-person financial advisor, compared with 51% of Boomers. Still, they are turning to other avenues for help in managing their long-term finances.
Millennials are more likely than those from earlier generations to be open to getting advice online and are more likely to think that advice they receive would be extremely or very trustworthy. Roughly half of this generation are willing to receive advice online rather than from an in-person advisor when it comes to saving for retirement (50%) and improving financial wellness (47%). Nearly the same share would use an online advice service with the option to talk with an advisor over the phone (45%). Thirty-five percent of Millennials are interested in receiving investment advice via web or video chat with an investment professional.
Many financial companies have started to offer robo-advice services in which an investor provides some information about their financial picture and, using models developed by experts, receive a customized portfolio at a lower cost than traditional in-person advice. Nearly four in ten (38%) Millennials are interested in robo-advice, compared with just 19% of Gen Xers and 9% of Baby Boomers.
Younger Consumers are Willing to Pay More for Robo-Advice.
People generally expect to pay more for access to more human interaction, however, each generation has different ideas about how much they would pay for different levels of investment service. Consumers from each generation were asked, if they had $10,000 to invest, how much they would pay per year for an in-person advisor, a robo-advice service with access to an advisor over the phone, and an entirely online robo-advice service. When it comes to the online investment service, Millennials more often say they would pay more than earlier generations regardless of the option to talk to someone over the phone.
More than half of Millennials (54%) would pay at least $50 for a robo-advice-only service, compared with nearly four in ten (37%) Gen X consumers and one in five (20%) Boomers. A similar share of Millennials (58%) would pay at least $50 for the online service with the option to speak to an advisor over the phone, including one-third (33%) who would pay at least $100 for the additional access to an advisor. Significantly fewer Gen X consumers (25%) and Boomers (23%) would pay that much for a hybrid service.
The prospect of lower-cost online advice is an appealing option for attracting younger clients with lower incomes starting out. Providing and promoting a valuable robo-advice tool with education about subjects young people are most interested in can foster a relationship between the consumer and the company, creating the opportunity for long-term business. Millennials are willing to pay more than earlier generations for an online service that will give them the information they need to make sound retirement decisions and improve their overall financial wellness.