How Invest-tech is innovating for millennials

QuickLook Blog

Millennials are reshaping the fintech industry, and investment managers are making changes to target this unique generation.

February 20, 2019

A blog post by Ankur Gajjaria, senior analyst at the Deloitte Center for Financial Services, Deloitte Services India.

Investment managers are making changes to adapt to the millennial generation

The millennials are here, and businesses are taking serious note. Shiseido, a 146-year-old Japanese cosmetics firm, is undergoing a makeover to target millennials.The revamp includes discontinuing nearly 100 products that are less appealing to this segment. Additionally, the firm is integrating Western color trends and Asian design into its makeup line and enlisting a 16-year-old Olympic champion as a brand ambassador to position itself favorably with millennials.2 Long standing firms across industries are taking similar steps, because they believe millennials are different and will become a crucial market in the future. With this generational cohort estimated to ultimately manage nearly $30 trillion, investment managers could definitely pick up some cues from Shiseido’s makeover.3

A US Federal Reserve report notes that millennials have unique financial, economic, and experiential circumstances.4 On the positive side, they are more educated as compared to earlier generations.5 On the negative side, millennials are less well off than other generations were at the same age, with lower incomes, similar debt levels, and fewer assets.6 Together, these attributes have led to different consumption, spending, and investing preferences as compared to other generational cohorts. Considering the multi-trillion-dollar millennials wealth opportunity, investment managers are reinventing their traditional product, distribution, and experience approaches to cater to this segment.

Innovative investment management solutions complement millennial spending habits

The makeovers and innovations to target this generation vary across product design, customer experience, digital platforms, and pricing. Most firms combine innovative features that are complementary in nature for millennials. Let’s have a look at these:

  • Product innovation—Considering the huge debt burden on millennials, some fintech firms are experimenting with micro-investing. Investors can save and invest small sums of money, from their savings or spare change from their credit card expenses. One fintech firm allows users to invest as little as five dollars in low-cost Exchange-Traded Funds (ETFs) and charges a small fee for maintaining the account.7 These small amounts are used for buying fractions of ETF shares, thereby enabling its clients to gain early equity exposure.8 Another firm rounds off spare change from credit card purchases and invests the round ups into low-cost ETFs. Alibaba’s Yuebao (which means “found treasure”) money market fund became the largest such fund in the world by locating idle balances on its digital platform and sweeping them into the fund.9 Firms are also keeping in mind millennials’ environmental concerns and sustainability preferences. The number of environmental, social, and corporate governance (ESG) and responsible investing options using smarter interfaces has risen to capture these preferences.
  • “Smart” experience—Millennials are using smartphones as their personal assistants, enabling them to perform everyday activities including maintaining shopping lists, making payments to posting product reviews. Developing an elegant smartphone application seems to be a bare minimum for firms targeting millennials. Another approach is the adoption of digital voice assistants, which target both millennials and existing customer segments. Some firms are already creating investment services through digital voice assistants, and one is testing voice-activated online trading solutions via Amazon’s Alexa.10,11 In the near future, digital voice assistants may be suggesting investment recommendations and portfolio allocations for clients based on their risk profile and financial goals.
  • Pricing innovation—Fintech firms and incumbent investment managers are competing on price to capture Millennial assets. The launch of zero-fee funds in mid-2018, along with zero-commission platforms, was a seismic shift in the traditional investment management industry. Investment managers are investing now in building relationships with millennials, keeping in mind the potential of selling other services in the future. Fintech firms are offering low-cost or zero-fee trading accounts via mobile applications, targeting millennials across the globe. The popularity of such apps among millennials is growing, with US-Fintech firms surpassing 5 million brokerage accounts in September 2018.12
  • Community platforms—Considering the social media and do-it-yourself (DIY) preferences of millennials, a number of community-based investment solutions have launched. These applications integrate social and gamification options on their platforms, including leaderboards, mirror trading, and DIY themes that can compensate both the platform and the theme developer.

Fintech firms and investment managers will likely continue to innovate as they pursue their millennials journey. Is there an unexplored area targeting millennials ripe for innovation? Will the makeover for this generation be a short-term project or a long-term transformation?

What do you think?

How do you think millennials are shaping the investment management industry?

Join the conversation on Twitter: @DeloitteFinSvcs.


1 Lisa Du and Maiko Takahashi, “146-year-old cosmetics firm Shiseido gets makeover to woo millennial buyers,” Bloomberg, August 1, 2018.
2 Ibid.
3 Prof. Amin Rajan, Digitization of asset and wealth management: promise and pitfalls Create Research, 2017.
4 Kurz, Christopher, Geng Li, and Daniel J. Vine (2018). “Are Millennials Different?,” Finance and Economics Discussion Series 2018-080. Washington: Board of Governors of the Federal Reserve System, accessed February 2, 2019.
5 Ibid.
6 Ibid.
Heather Long, “How to get started investing….for $5,” CNBC, October 16, 2015.
8 Ibid.
9 Doug Dannemiller, “2018 Investment Management Outlook”, Deloitte, December 2018, accessed February 2, 2019.
10 Hugh Son and Katherine Chiglinsky, “JPMorgan Brings Amazon’s Alexa to Wall Street Trading Floors,” Bloomberg, March 26, 2018.
11 Doug Alexander, “’Alexa, Buy Tilray Shares.’ TD Ameritrade Gets Voice Purchases,” Bloomberg, October 24, 2018.
12 Kate Rooney, “Robinhood is on the path to IPO and is searching for a CFO,” CNBC, September 6, 2018.

QuickLook is a weekly blog from the Deloitte Center for Financial Services about technology, innovation, growth, regulation, and other challenges facing the industry. The views expressed in this blog are those of the blogger and not official statements by Deloitte or any of its affiliates or member firms.

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