OSC: how to engage overwhelmed millennials

Study shows that generation feels industry barrier make it harder to decide whether to invest

OSC: how to engage overwhelmed millennials

Millennials remain overwhelmed and stricken with inertia when it comes to investing, according to a new study by the Ontario Securities Commission.

The report explores the barriers the generation feels stands between them and the industry, and offers six principles that professionals can employ to engage them better.

The report states: “Research indicates that millennials are doing a lot right - from saving regularly to paying off debt – but that there are significant barriers that make it harder for them to decide whether investing is right for them and to act on their intentions.”

The study featured 90-minute in-depth interviews with 19 Ontarian millennials, each of whom was employed full time and had some experience of investing or were on the cusp of doing so.

It delved into the psychology of that age group and discovered that, unlike previous generations, they found it difficult to imagine their future and found the prospect of investing overwhelming.

The study also weighed up the pros and cons of the broad investing channels: bank and credit unions; robo advisors; micro investing; and workplace pensions.

Interestingly, the report casts doubts on the robos’ ability to connect with what many view as their target audience.

“Many robo-advice offerings make a priority of using plain language and intentionally targets millennial priorities and values.

“However, the fact that robo-advice platforms report high customer acquisition costs and have yet to capture substantial market share, suggests that the model also misses the mark addressing behavioural barriers.”

To combat millennials’ trepidation and fears over investing, the report establishes six principles for firms and advisors to implement. They are:

  • Identifying millennials’ own motivation for investing
  • Providing personalized, achievable steps
  • Make the future consequences of their current actions feel more concrete
  • Use social comparisons to promote achievable investing habits
  • Allow low-risk experimentation to build confidence
  • Inspire trust by putting the user’s needs first

The report concluded: “The aim of design principles is to start a conversation about how programs, products and services might be delivered in more human-centred ways that will better engage millennials in investing for their future.

“They are intended to inspire stakeholders in all parts of the investing ecosystem — from investment firms, to organizations delivering investor education, to fintech start-ups and others — to test new models, observe how their users respond and continue to learn and adapt.

“While we believe the design principles that have emerged from this project offer a starting point that is particularly relevant to engaging millennials in investing, this approach has implications far beyond the millennial cohort. Saving rates of Ontarians have been declining steadily for a generation and the behavioural foundation of our design principles should be equally relevant to promoting investing among other cohorts.”