The advisory firm of the future will provide the nation's 92 million millennials with digital services that most advisers can't really imagine today.
But adviser technology provider
Envestnet asked about two dozen college students to conceive a plan for such a business last summer. The millennials spent eight weeks creating plans for a financial service that would spur them and their giant generation to begin investing. They conceived "Zenvestr."
"It's aimed at making investors feel less stressed about money," said Envestnet president Bill Crager, who spearheaded the project with his firm's interns. "They made a strong case for the psychological anxiety that millennials have about their finances."
Nearly all the students who were involved will graduate with student debt, and at least one had a parent who lost a job during the market crash in 2008, he said.
Millennials, the generation that's now about 18 to 36, are thought to be more skeptical about investing than Generation X because of the impact the
recession had on their lives. It hit during the early years of many millennials' careers or, in some cases, as they were seeking to attend college, a goal that may have been limited due to their parents' economic pains.
They have also never lived without cell phones, and most were teens or younger when smart phones were introduced and came to be the norm.
So naturally, the theoretical Zenvestr would provide most advice through an app.
The service would include a digital budget coach to help clients set limits on how much they can spend at the bars over the weekend and other priorities, and it would send real time alerts if their Venmo payments accrued with abandon.
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It would incorporate an online meditation station that clients would visit before making large purchases for help deciding whether it was worth the cash, Mr. Crager said, describing the project to the approximately 1,100 advisers attending the Envestnet Advisor Summit held near Dallas this week.
The Zenvestr chatbot, powered by artificial intelligence, would describe the longterm trade-off of spending $200 on a sweater today versus investing the $200. It also would remind the client of his or her outstanding credit card bills.
The app would cost about $25 a year, plus additional fees if clients sought investments, Mr. Crager said in an interview on Thursday.
"They were way off on the financials, but they were creative and thoughtful about designing an approach that would really work with this demographic," he said.
Two additional Zenvestr components would be an electronic matching service to find live planners who the algorithm determined would be a good fit for that client, and a competition among clients in the race to save money, incorporating social media posts of those who were at the top and bottom in terms of amount saved.
Some advisers at the conference were excited by the forward-thinking approach of Zenvestr.
"I think that's where we're going," said Mike Damas, president of
Maryland Capital Advisors. "That vision is on track with what I have picked up from conversations with my clients' millennial children."
Other advisers rejected the idea of Zenvestr because live advice plays a supplementary role to the technology.
They also said their clients would not be interested in such a service.
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Mr. Crager urged advisers to be open minded.
"For advisers who had the reaction that Zenvestr doesn't apply to their business because they don't work with this demographic, I'd tell them that there's a very large population that's beginning to earn a nice paycheck," he said. "They want help paying down student loans and other advice, but they don't want to pick up a phone."
This summer a new set of interns will work to further develop the concept, he said.
