Data suggests that 47% of new investors in 2019 were millennials. Further, they form a number of at least 400 million and constitute a minimum of 40% of the total workforce. These numbers are indicative of the plentiful opportunities associated with millennial clients.
The latest episode of ‘Lessons from Master’ exclusively covered acquiring and dealing with millennials. In conversation with K S Rao, Head - Investor Education & Distribution Development, Aditya Birla Sun Life MF, Dr Celso Fernandes of Nave Marg Financial Consultant shared some valuable advice.
Dr Celso is a dentist by qualification. He enjoyed great success in his career and was also appointed as the president of the prestigious Indian Dentistry Association (IDA). In 2008, he took the leap and became a financial advisor. The zeal for spreading financial awareness amongst students got him closer to millennials. He strongly believes that millennials offer huge business potential for MFDs. Dr Celso identifies millennials age range as 18 years to 25 years. He believes imparting financial literacy is the key to making millennials SIP-friendly.
Here are some of the important lessons from the session:
- Be a storyteller - It is easier to connect with young minds through stories. Narrate stories that millennials can connect with and learn from. For instance, the role of MFDs can be effectively explained through the example of a trek, where a Sherpa guides the way to the top of the mountain. Narrating real-life examples in the form of stories will make it easier for MFDs to break the ice and win their confidence. Likewise, penning down a few of these stories in a book can also help imprint financial wisdom on young minds
- Keep it simple - Once the millennial is convinced with the idea of investing, MFDs must simplify the entire experience. Firstly, connect to them emotionally and not logically. Emotion-based discussions are often easier than logic-based arguments. Further, refrain from complex structuring and simplify the actionable. For example, the 5:25:70 ratio. This ratio indicates that for every Rs 100, Rs 5 must be directed towards insurance, Rs 25 towards investments and the balance towards spending. Having a ratio like this makes it easier for the millennials to understand and follow the MFD’s advice
- Hold on to them - It is believed that the first three years of an association are the most crucial as they lay down the foundation to stronger relationships. Millennials need hand-holding during this phase. Thereafter, there is a higher probability of them being associated with you for long. These clients are young, and you may recommend an ELSS which not only helps in creating wealth over time but it can also work as an effective client retention tool. Review meets every 3 months or 6 months will gradually make them more comfortable and will also increase their confidence in you.
- Be specific in referrals - The conversion rate through social media is not as high as the conversion rate through referrals. Explicitly ask for millennial referrals from existing clients. MFDs can also design referral incentive programs that can motivate existing millennial clients to bring their friends along.
Click here to view the video.
