The push to attract millennial investors, and the trillions in assets supposedly being transferred to us, has been a key driver behind recent industry trends, especially technology, which is often sold as a sort of magic bullet for bringing in next-generation clients.
But is it working? I'm doubtful.
In conversations with my friends about money — dear God, when did those start happening? — only a few are investing at all beyond a 401(k) account provided by their employers. Those who do invest prefer do-it-yourself accounts, with traditional brokerages, over working with digital startups or a financial adviser.
While this is purely anecdotal, and we know startups have attracted thousands of millennials as customers, there is data to back up my experience. According to Ray Boshara, director of the
Center for Household Financial Stability at the
Federal Reserve Bank of St. Louis, three in five millennials have no exposure to the stock market. The holdings of those who have market investments was a median of $7,600, which is low compared to Gen X when they were the same age.
So what's going on? I reached out to my fellow millennials via Facebook and a couple dozen text messages to learn more about how my peers are managing their money and what they think about the tools available to them.
App fatigue
One of the most surprising things I learned was how few of my friends are using apps to help with true personal finance. Many tried Mint before ultimately ditching it in favor of relatively old-school Excel spreadsheets. One married couple said they use Acorns to automatically save toward vacations, while one other friend said he opened a
Betterment account years ago but rarely checks it.
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A chief concern is turning over personal data to a company that they aren't familiar with, and a second problem is volume. There are just too many apps out there to take the time necessary to research and pick a good one.
"There are so many, it seems, and my uncertainty about who they may share my information with also makes me a bit wary about who I give information to," said Sam Zneimer, a 32-year-old transportation consultant.
Rachel Allen, a 27-year-old bartender, agreed. She said she doesn't feel comfortable giving out her account and credit card information simply to try out a startup.
"We don't know who is starting these apps," Ms. Allen said. "Banks at least have been around for decades."
Big bank brands still hold sway
Ms. Allen was far from alone in trusting more established financial institutions over startups. Every person I talked to said their bank's app is the most important, if not the only, digital tool they use for managing personal finance.
Several friends use budgeting tools that their banks include in apps and mobile sites,
finding this accounting aid
more helpful than third-party startups. They also said the banks have cleaner and easier-to-use interfaces than other financial institutions, especially on mobile apps.
Millennials who do invest also mentioned the value in brokerage accounts integrated with banking, such as
Bank of America and Merrill Lynch, for ease of use and cost benefits.
While the largest financial institutions were slow to digitize and had to invest billions to catch up to the capabilities at custodians and independent RIAs, perhaps that investment is paying off. Being the single location to serve all of a person's financial needs could pay off huge down the road as millennials' financial lives get more complicated.
More love for account aggregation
Lisa Ellis, a 30-year-old senior product manager for a sales consulting firm, said keeping track of her money across bank, credit union and brokerage accounts is one of her biggest frustrations with money.
It would be cool if one of the firms made it easy to pull everything into a single location, Ms Ellis said. But her current providers make it too difficult, and she doesn't
trust a third-party company with data about all her accounts.
Ms. Ellis' views highlight why account aggregation is so valuable — and why companies liked
Quovo and
Yodlee came with such expensive price tags — but also what makes it challenging for advisers.
Aggregation requires investors do the work of syncing all their accounts and keeping login information current, and requires they trust the tech firm with all of their data on all their accounts.
More helpful client portals
Ms. Ellis also would like to see firms improve the information they provide. Although she uses her
TD Ameritrade app to check on her portfolio, the over-abundance of acronyms and industry jargon makes her feel like she needs to study finance full-time just to understand her investments.
"I don't know what I'm looking at half the time," Ms. Ellis said. "I can see how much money I have, but I don't exactly know why I have money or how I can get it."
Kailey Oppenheim, a 31-year-old IT consultant, feels the same.
"I enjoy being able to see my unrealized gains/loses, but sometimes it's confusing to see how much I originally invested in cash and how much I've made through earnings," she said.
This isn't an issue unique to millennials. While some clients will take a look through the details of their portfolios, the bulk of statements and reports go straight into the garbage.
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Simply throwing the same data onto the website or app isn't making anything better.
It may not be as sexy as developing an artificially intelligent robo-adviser, but a digital client portal that helps investors understand the important details of their portfolio would go a long way toward satisfying millennials.
