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ESG. Crypto. Fintech. This isn’t your grandpa’s bank.
The days of a good old-fashioned bank run—literally tooling it to the nearest branch to deposit or withdraw money in person, slip in hand, while fiddling around for a pen in the glove compartment (remember that?)—are practically extinct, thanks to the newer, tech-fluent generations stepping in. The bank of tomorrow is omnichannel, with digital-forward offerings that lie at the intersection of convenience and an elevated customer experience. To meet millennials where they’re at, banks need to be everything and nothing—all at once.
Changing Hands
“Specifically for our millennial clients, we are tailoring both how [we communicate] and how frequently we communicate with them,” says Elise Huston, CFP, advisory services manager of JNBA Financial Advisors. “Some prefer more frequent virtual meetings or one-off calls to address very specific issues rather than a formal touch-base meeting. Having the right technology in place to make it as easy as possible for them to access information or their advisory team is really important.”
There’s a lot at stake as we reach the cusp of a historical first: Baby Boomers and the Silent Generation will collectively bequeath an estimated $30 trillion to $68 trillion to their adult children, according to Forbes (this is otherwise known as the Great Wealth Transfer, the largest redistribution of wealth in American history). This monolithic figure will be driving a shift in capital to new processes, priorities, and platforms. As a result, financial institutions are expected to capture the zeitgeist—and those who haven’t are late to the game.
“Technology has become a critical component of financial services for all demographics, but younger clients noticeably expect their provider to have certain capabilities,” says Brian Schumacher, consumer segment and wealth management director of Alerus. “We’ve invested in things like online banking and mobile apps, and interactive budgeting and financial planning tools to help clients achieve long-term financial wellness.”
U.S. Bank’s mobile app, which launched in 2019, has more than 140 new features, including video, virtual appointments, and a virtual assistant that helps customers efficiently locate relevant content. “We also launched a new and improved robo-advisor, Automated Investor, which is targeted at the beginning investor,” says Beth Lawlor, president of private wealth management at U.S. Bank. “We lowered the minimum investment, added seven new customer-friendly goals, and services are faster and easier to use.”
Millennials value convenience and, well, their values. Since they are more motivated by a brand’s values than the generations that precede them, experts have been witnessing a conscious aligning of spending (and saving) with causes that millennials care about. In their quest to make a positive mark, they’re popularizing sustainable investing that takes social responsibility and environmental friendliness into account.
For its second Women and Wealth Insights Study, U.S. Bank surveyed more than 3,000 people about how they manage their money. One-third of those surveyed were Gen Zers or millennials. Data showed that more than any other generations, this group prioritized working with a financial advisor that has a strong workplace equality/diversity rating [65 percent of Gen Z/millennial women and 67 percent of men], supports gender equality in the workplace [54 percent of women and 48 percent of men], supports international human rights [56 percent of women and 55 percent of men], and supports public health issues like autism and cancer [51 percent of women and 49 percent of men].
Swipe to Invest
“If they’re living their values in every other aspect of their life, why wouldn’t they look at it for their investing as well?” says Huston. She references a poll that points to one-third of millennials often or exclusively using investments that take ESG (environmental, social, and governance) factors into consideration. “Based on financial life planning conversations with our [millennial] clients, they tend to be very value-focused … and share thoughts around sustainable living, going greener, and being more intentional in general,” she adds.
This tool of change—the ESG concept—has been around since the ’60s, when the anti-war movement and civil rights advocacy gained steam. These days, social justice movements center on issues like climate change, data protection, labor standards, and social inclusivity. While millennials aren’t the first generation to address ESG in their investments, they are just an internet search away from making socially responsible investments, says Caitlin Winter, Vice President Branch Banking of Bridgewater Bank.
“Millennials are actively leveraging their investment decisions to influence issues that align with their values rather than simply their potential for profit,” Winter says. She cites research by Accenture that says 67 percent of millennials believe investments are a way to express social, political, and environmental value, versus just 36 percent of Baby Boomers. “As millennials control more and more of the global investment dollars [as a result of the Great Wealth Transfer], ESG issues they care about will continue to be in the spotlight.”
Understanding the values that align with millennials’ investment strategies means financial advisors need to engender meaningful relationships, engaging with clients on their level—and at their pace—for tailored advice.
Courtesy of JNBA Financial Advisors
Elise Huston, CFP
“If [millennials] are living their values in every other aspect of their life, why wouldn’t they look at it for their investing as well?” Elise Huston, CFP / JNBA Financial Advisors
“We have been doing this for over 40 years, and we know the importance of starting early and building relationships, and so do the younger clients we get to work with,” says Huston. “Our approach to financial life planning has always been, at the very forefront, understanding you as an individual. What’s unique about you? What are your goals? What are your values, and what do you want to achieve with the money you have worked so hard to save?”
Once trust with an advisor is sealed, many learn that having a suite of digital services at their disposal is just as necessary as a strong advisor-client relationship. One doesn’t cancel out or replace the other.
Health + Wealth
“Outreach to millennials is table stakes for us,” says Lawlor. “We invite them to our virtual events focused on both human interest and mental health, well-being, and inspiration, as well as financial topics.” She says showcasing the priority as the whole person and not just financial well-being, which most associate wealth managers with, is what resonates with most.
Financial wellness is a term that’s become entrenched in internet culture, and while its meaning has been stretched and pulled over the years, the consensus points to financial and physical health being integrally linked. This idea has given rise to companies like the NY-based Financial Gym, which considers itself a personal financial services company with a fitness-inspired approach. Financial Finesse is a B2B company with an aim to, according to its website, “create holistic workplaces where employees value their purpose as much as their paycheck.”
No matter how you slice it, money is stressful, and stress is bad for our health. It’s a long game that involves routine budgeting, automating, handling, and recalibrating.
Mythbusters: You Need A Lot of Money Before You Need Advice.
Our financial professionals provide complimentary planning to all clients because we want to make a positive impact on their financial futures. There are big decisions that need to be made early in a person’s career, like when and how much to start saving for retirement, how to prepare for unexpected expenses, or even establishing a monthly budget to help pay down debt and maybe save for a home down payment.
Brian Schumacher, consumer segment and wealth management director of Alerus
“Our business model pairs every client with their own dedicated financial guide, who serves as the point of contact for anything they need,” says Schumacher. “When you have a person who you can contact anytime for guidance, they get to know your unique needs and can help you plan and make difficult decisions more effectively, which naturally lead to long-term, trusting relationships.” He says that personalized advice gets paired with an app that enables clients to measure, set, and track goals for things like retirement based on the individual’s actual situation versus a generalized scenario.
Lawlor says that in the flurry of tech-savvy touchpoints, human touch still goes the distance, even with younger people. “We found that even those who have grown up with technology still want to talk to someone where investing is concerned,” she says. “One of our past surveys found that 83 percent of millennials want human help when using online services that manage their investments for them.”
Is Crypto the New Gold?
While many consumers remain skeptical about crypto, millennials have embraced the new age of digital currency. As more and more information becomes available and people gain enough exposure about how crypto works, broad-based adoption will likely continue. We are still a couple of years out from seeing specific guidance on how financial institutions can opt in or out of the use of crypto within their normal business operations and what kind of information or transaction-level data sharing will be required for regulatory purposes.
Caitlin Winter, Vice President Branch Banking, Bridgewater Bank
Does Size Matter?
The Wells Fargo phantom account scandal of 2016 sent shock waves everywhere, costing the bank titan at least $3 billion in legal fees. The priceless by-product of its fraudulent conduct, however, was the souring of its reputation, not just for Wells Fargo but for banks seemingly everywhere. Big on trust issues, how can millennials feel that the bank they do business with is being a trustworthy custodian of his or her wealth?
“We pride ourselves on our culture,” says Lawlor. “We prioritize diversity, equity, and inclusion, and we have made an ongoing commitment to creating opportunities that bridge gaps, create economic prosperity, and allow people to achieve their potential.” She says that in 2021, U.S. Bank was named one of the World’s Most Ethical Companies by the Ethisphere Institute for its seventh year.
“We truly believe in a customized experience for each individual to meet them where they are. Our business model supports that approach,” says Huston. “JNBA is a fiduciary, which means we have a legal responsibility to make decisions that are in our clients’ best interest. Our fees are transparent. It’s not just words.”
For Bridgewater Bank, headquartered in St. Louis Park, Winter says the playing field between community and commercial banks has leveled over the years. “The millennial generation has really diversified where they choose to bank,” she says. “One important thing to note is that local banks are now able to offer products and services that rival those of the larger out-of-state institutions. Many times, you can keep your local bank and travel the world with ease, no matter where you bank.”
Courtesy of U.S. Bank
“We found that even those who have grown up with technology still want to talk to someone where investing is concerned. One of our past surveys found that 83 percent of millennials want human help when using online services that manage their investments for them.” Beth Lawlor, president / Private Wealth Management, U.S. Bank
This article originally appeared in the April 2022 issue of Mpls.St.Paul Magazine.
