Investing is boring.
For anyone under the age of 30 investing ranks a long way down in the list of important financial decisions. Investing ranks much lower than spending on the latest smartphone, streaming service or wondering how on earth it is possible to afford a deposit for a mortgage.
To be fair it’s hard to get excited by saving – and its sibling – investment at the moment. With savings rates at anaemic levels the well-trodden path of putting a little away and watching it transform into a nest egg seem the stuff of fantasy novels. The knock on effect on investment is even more telling. In an effort to garner a meaningful return riskier investments are being considered.
The fact that the bond market dropped into negative yield territory has meant that equities have been chased up. Indeed markets have rallied beyond historically normal levels – Look at the cyclically adjusted price earnings ratio (CAPE) for most developed markets (S&P 500 example shown below) and you’d be hard pressed to find a rational reason to invest in equities….aside from the fact that there is nowhere else!
Shiller PE Ratio*
But the younger generation should be worried….and by extension so should those of us with children. The age old mantra of “it’s a marathon not a sprint” has never been more appropriate. We are all living longer and expectations for living standards are unlikely to decrease therefore encouraging the next generation to invest regularly is vital for them to achieve a pot that will sustain them through their later lives.
So how do we get the next generation of investors to engage?
Industry firms must learn to adapt their offerings and approach. A few years ago there was a concern that people weren’t reading anymore. The newspaper industry was seemingly in its death throes and all seemed lost but people still read. How and what they read has changed. The rise of free papers, free online content and blogs has created a seemingly limitless wealth of information on all matters not just finance but how much of it (if ANY) can be trusted?
Twitter, Snapchat and Instagram devotees have little time for detail and instead want instant gratification, instant responses and instant answers. Not easy for an industry seemingly hell bent on adding rafts of regulation, detail and documentation. Can asset managers truly capture the imagination of this generation? Will they switch off completely or try and find alternative, untapped routes to pique their interest – the rise of crowdfunding gives us a clue to where they could be heading.
What can traditional asset managers do to stop a potential loss of customers?
One is the merger & acquisition route in the hope of synergies and safety in size.
Another route is to make things cheaper and easier and to this end Robo-Advisors (easier than a visit to or from an IFA?) and passive investment (ETFs – typically much cheaper than an active funds) are obvious paths.
However not all asset managers can or want to be passive and indeed and some will fight the Robots tooth and nail so another way is to enhance what is currently being provided. Enable the new tech-savvy investor to interact with the funds in whichever way they desire. Allow them to explore, examine and create their own views of the fund. Here at FundAssist we are pushing the boundaries of digital factsheets by allowing the creation of user defined content on tablet and mobile devices.
Seeing is believing
In a recent survey by OnePoll in 2015 recognised that amongst 16-45 year olds YouTube has become the “most trusted online consumer source with 42.4% saying they “trusted it over any other source”. When you consider Magazines placed second with just 23.2% and TV a lowly third at 14.4% and 52% said they were “more likely to buy a product seen on this medium rather than elsewhere” and a significant number (42%) prepared to investigate a product further following a YouTube viewing you realise its importance to this age demographic.
The challenge for Asset Managers is to try and make video content for funds that capture the imagination and engages with the target market whilst maintaining its objectives of informing and adding value to the investor.
The challenge is set …how asset managers respond will determine who survives and who falters.
Contact the FundAssist team to learn how our bespoke service offerings can help you engage with your target market.
*30/06/17 Available at: http://www.multpl.com/shiller-pe/