Millennials ‘open to investing with BigTechs’

Half of Millennials would, if it was offered, purchase investment products through a well-known BigTech company like Google, Apple or Microsoft.

Global fund network Calastone surveyed more than 3,000 people aged 23 to 35 across the UK, France, Germany, US, Hong Kong and Australia, finding that for Millennials who already actively invest, this figure rises to almost two thirds (63 per cent) globally and to 71 per cent in the UK – which could have significant impact on the $47 trillion funds industry.

As well as placing trust in Silicon Valley’s biggest players, Millennial investors in the UK also placed a significant degree of trust in technology itself, with 52 per cent stating that they would trust a computer algorithm to invest their money for them. The UK also came out on top as the most trusting of algorithm-based investing, with a higher percentage than peers in Europe, the US and Asia.

Calastone suggested there is a clear trend that as young investors become more sophisticated, their willingness to buy elsewhere and to look at non-traditional players increases, indicating that loyalty to current providers does not necessarily increase over time.

This comes at a time when challenger banks and mobile money management platforms are drawing Millennials from mainstream finance. The report noted that as other areas of financial services have reacted to the evolving needs and increasing tech-savviness of younger generations, the investment and funds world must also start to focus on the areas that make BigTechs’ successful, such as accessibility and user experience.

Andrew Tomlinson, chief marketing officer at Calastone, commented: “With the knowledge that there is already a growing level of trust from Millennials, who would consider buying investment products from big tech companies, the potential for the technology giants to enter the investment world only increases.

“Whoever controls access to the investor, controls the market – fund managers and distributors need to be mindful of this.”

Many BigTechs already offer basic financial products, for instance in Asia, Alibaba’s Ant Financial has entered the investment funds market and has already attracted a huge investor base to create the world’s largest money market fund.

Tomlinson added that as Millennials entered full-time employment during or shortly after the financial crisis, wage growth has been subdued for many of them, leaving this demographic with less disposable income than the Baby Boomer and Generation Y cohorts.

“It is now imperative that asset managers acquire a better understanding of what this subset of the population needs, and ensure their strategies are closely aligned with those very same requirements.”

Earlier this year, research revealed that after inheriting, 28 per cent of high net worth (HNW) clients’ children discontinue the relationship with their parents’ wealth manager, with many moving the money to digital challengers.

GlobalData’s latest report found that 38 per cent of the global HNW population is above the age of 60, which equates to 4.3 million individuals.

FStech looked deeper into the trend for how asset managers must attempt to woo younger investors with better service and technology offerings.

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