CFA Society organised a seminar titled, ‘Putting investors first: rethinking financial services for millennials,’ last month in Mumbai. The panellists gave interesting insights on the financial habits and psyche of millennials.
People born after 1985 are widely considered as millennials.
Here are the key pointers to help you understand how you can serve millennials.
Simplyfying process: Panellists suggest that the mutual fund industry should simplify the process of onboarding an investor. Kalpen Parekh, Joint President of DSP BlackRock Investment Managers, says, “Investing in mutual funds is difficult for first time investors. In my view, fund houses should make the investing process simple by leveraging technology to attract millennials. These investors should be able to complete a transaction in a few clicks when they visit a fund house’s website. Many e-commerce platforms provide seamless transaction experience. We should take a cue from them and implement in our industry.”
Emotional connection: The MF industry should try to engage with millennials in a way that would help them make an emotional connection. The Joint President of DSP BlackRock believes that fund houses are unable to connect emotionally with their customers. Lack of emotional connection makes it harder for fund houses to convert prospective clients into investors. “Instead of showing past performance of any scheme, fund houses and advisors should try to engage with millennials by asking them questions to understand their needs and goals. The more you ask questions, the better you can connect with them,” he says.
Listening to millennials: Panellists recommended advisors follow the 80:20 rule – spend 80% time on listening, and 20% on asking questions during interaction with a millennial. “Most of the young professionals do not want to plan for their retirement. They have different financial goals like foreign holidays and entrepreneurship or may be early retirement. Advisors should listen to their needs and goals first and draft a financial plan accordingly,” say panellists.
Peer reviews: All panellists agreed to encourage mutual fund investors to write their reviews on products in which they invested. Navneet Munot, CIO, SBI Funds Management, said that mutual fund products should also have a customer review or star-rating similar to reviews and ratings of the products listed on e-commerce websites. “Though a few research firms give their ratings to funds, recognition and product reviews directly by investors would be more credible. This would attract millennials to learn from other people’s experience,” he added.
Bank account and liquid funds: Experts are of the view that advisors should try to replace savings bank account with mutual funds. The CIO of SBI MF said, “Liquid fund could be the first step to invest in mutual funds. Once they get confidence, they will invest in other schemes like equity funds and debt funds.” SEBI’s latest move to allow instant redemption of up to Rs50,000 will help liquid funds to gain popularity.
The panellists described how the mutual fund industry in China and US grew manifold after investors used liquid funds to manage cash flows.
