In her February article, ‘Why millennials go on holiday instead of saving for a pension’, Aime Williams of the Financial Times set off a Twitter storm of unprecedented proportions (well, at least by the standards of the FT’s greyer-haired readers) with more than 10,000 people clicking though to the article from Twitter alone. A lively debate ensued, involving much incredulity, some finger pointing, and an improbably large number of felines pictured in various states of distress. Much of the hoo-ha in the comments and tweets that followed revolved around a single claim: that 25 year olds should be saving £800 a month into their pensions. At the bottom of a follow-up article addressing the uproar, one of the most recommended comments highlighted the many obstacles that a young would-be-investor has to face today – and concluded with the following words: ‘In short, it’s best to tweet out a cat meme and laugh’.
Wise words? Well, perhaps not quite worthy of the Sage of Omaha, but to many millennials this investment advice may still have the benefit of being slightly more candid – and far more actionable – than anything else that passes for good personal finance. As millennials fight a well-documented uphill battle against the dastardly duo of high rent and low opportunities, the asset management industry certainly has its own hurdles to overcome. The material issue of actually having disposable income to save aside, how can we persuade young workers – my generation – to touch investment with anything other than a bargepole? If you try and tell us it’s in our interest we won’t believe you – even if you’re right.
Perhaps the greatest challenge for anyone wishing to sell anything to millennials is remembering not to do so. Really. Don’t: it’s annoying. I suspect I speak for a lot of people my age when I say I would never buy anything from anybody who looked like they were actively trying to sell their wares. The smartphone generation wants impartial information – not a sales pitch. However much you truly believe you have an amazing product, we still need to hear it from somebody else.
People like to talk about Airbnb and Uber as examples of the sharing economy, but what these two companies have in common with the ultimate driver of the retail internet economy – Amazon – is the possibility to share information on the actual products and services delivered. In 2016, if I wish to purchase something, the first thing I’ll do is look for consumer reviews. I know many (read: most) fund managers would be reticent about providing a platform where somebody with little or no understanding of a complex product can post their thoughts and, in all probability, criticism for public consumption. True, some funds will fare badly ratings-wise – but brand is about an overall picture, and being open to feedback is vital if you wish to have any credibility with the millennial generation. What’s more, in a cat-eat-cat world the best funds will naturally paw their way to the top, supported by users’ positive comments.
A shift toward greater transparency in terms of holdings and strategy (à la Woodford) would make any outside assessment of fund managers both easier and fairer. But make no mistake – whether you welcome it or not – if my generation decides it’s worthwhile investing our savings we will do our homework, and that means seeking out other people’s views and experiences. The truth is, personally I’m quite interested in finding out whether the ‘comfy bed’ at my Airbnb actually exists, and whether Bernard, sitting behind the wheel of my Uber, is not, in fact, a psychopath with a penchant for loud techno music. And I’m not alone: the folks at Airbnb will tell you (it’s no secret) that homes with reviews get more bookings than those with none. Airbnb is, in effect, a giant hotel with lots of nice rooms and some really awful ones. But the fact that on occasion the sleeping arrangements wouldn’t seem out of place in a late-Victorian prison is beside the point: those who don’t want to take a gamble or cut corners on price know they can plump for the safety of a room with a dozen five-star user-reviews – and are probably inclined to do so.
All in all, I suspect that if asset managers truly wish to engage with younger investors they should do their best to publicise their funds’ selling points – but give others the chance to confirm their veracity. Transparency – access to information and user reporting – is more important to us than advice ever will be. Selling to millennials means providing a platform for brand ambassadors, not just sales and marketing people. It also means accepting that the public success of some products will depend at least in part on the public failure of others; and in the worst cases this is likely to involve an intolerable barrage of cat memes! Time for asset management to grow a thicker skin?