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December 4, 2020

How to satisfy your younger investors (Hint: You’re doing it wrong)

Young investors are no longer just dipping their toes in the market – they’re taking the plunge.

According to our most recent Finance, Insurance, and Health Care Report, the percentage of respondents age 18 to 25 who’ve used internet investment services has nearly doubled year over year to 18%.

If only their level of satisfaction matched their eagerness.

While this generation’s participation in investment services is up, satisfaction is down, sliding 4% to an ACSI score of 71. This number is significantly worse than the industry average of 78.

So, why are younger investors so unhappy with their online investment experiences? How can brands not only attract, but retain these customers? Let’s take a look at where the industry is missing the mark (spoiler alert: it’s not just one thing).

Internet investment services are universally worse for wear

To say internet investment services aren’t meeting the demands of customers would be an understatement. And not just among younger investors.

The industry has the largest customer satisfaction drop-off in the Finance and Insurance sector at 3.7%, and not a single element of the investment experience improves.

Overall, internet investment services’ mobile apps fared best. But they’re still worse than the year before, with mobile app quality slumping 2% to 83 and mobile app reliability dropping 4% to 82.

Websites are struggling as well. Site performance, product selection, and the ease of making transactions all decline 4% to 79. Customers also find it more difficult to navigate sites, with satisfaction tumbling 4% to 78.

The remaining elements all decline to a score of 77: product descriptions (down 4%), customer support (down 4%), investment research (down 3%), and investment planning tools (down 3%).

Financial advisors don’t have the answers, either

Financial advisors have the same problem with younger investors. The percentage of survey respondents age 18 to 25 using financial advisors nearly doubled to 15% in 2020. Unfortunately, these young clients are less thrilled with their advisory experiences, as satisfaction sinks 3% to 72.

Among all demographics, we see similar patterns. While not as worse off as internet investment services, financial advisors also struggled to please customers in 2020, with satisfaction down 2.5% overall to a score of 77.

Mobile apps, like with internet investment services, have the highest marks. But, again, customers are less happy than last year, with satisfaction for mobile app quality and reliability both decreasing 4% to 81. Customers also want financial advisors to give them more mobile options to manage their accounts (down 1% to 76).

How to keep young investors engaged

The younger generation is more comfortable with digital tools. The problem is, both internet investment services and financial advisors are slipping in these areas. And it goes beyond tech.

Newer investors aren’t as pleased as seasoned investors. This year, customers who have worked with their online broker for less than a year are much less satisfied (72) than those who have been with their broker for more than one year (78).

Younger generations want to invest. However, the real challenge is keeping them interested. It starts with meeting their needs and focusing on what they want from an investment standpoint.

Online brokers should provide more digestible information for new investors. Everything from product information to investment research.

Financial advisors must establish a relationship. While trust and confidence are down 4% to 78, customers feel advisors could do a better job of explaining investment strategies (down 3% to 77) and prices and fees (down 3% to 76).

Determining how to relay this information effectively is another area of importance. Find a balance of communication. Most customers are less happy with the frequency of routine contact, by mail or by email (down 3% to 77), as well as contact by phone or meetings (down 1% to 75).

Improved digital services are a good place to start, but younger investors won’t just invest blindly. They don’t want to be bombarded with calls, but they don’t want to be left in the dark, either. You must walk a fine line.

The good news is younger investors are more receptive to investing. Only by meeting their needs can you keep it that way.

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