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Generational Differences in Investor Communications

Empowering investors with information how and when they want it is the best way to serve both boomers and millennials.

Intergenerational communication can be challenging, but it’s also an area of opportunity.

As millennials replace baby boomers as the largest living generation, the divide between these two groups has sparked vast amounts of research, commentary and predictions. Effectively engaging with investors on either end of the generational spectrum requires flexibility and a forward-thinking approach.

Evolution of Regulatory Communications for Investors

Investors receive an influx of information, some of which is required by regulatory bodies. Despite the fact that so much of what financial advisors and investors do today takes place online, a large amount of this information is still delivered in print.

Why the slow shift to electronic delivery and access? Some regulations have helped adoption rates, while others have hampered. Issuers have not necessarily felt the pressure or seen benefits in changing their delivery methodologies. And, a lack of interest from investors of all ages also contributes to the slow switch. Most investors don’t anxiously anticipate the arrival of their next prospectus or proxy statement, whether it’s delivered by the mailman or electronically.

Yet, the industry is changing. One of the driving forces is the increasing number of millennial investors, a group whose influence in the market is growing and whose preferences for digital access and communication are not one-size-fits-all.

A Look Back at Delivery and Communication Regulations

Delivery regulations have been in a constant state of change for the last several decades. In the mid-90s, the SEC established that the brokerage and advisor industry was permitted to provide information electronically, so long as the investor had given informed consent. At about the same time, the industry reviewed the rules regarding issuer reimbursement for brokers for delivery of proxy materials, and deemed that investors first had to provide informed consent before their documents could be delivered electronically rather than in paper.

The 2000s brought Notice and Access to the forefront. In 2005, the SEC allowed prospectuses to be deemed delivered to investors by virtue of their being filed with the SEC and available on EDGAR. However, the SEC declined to take this approach with investment company prospectuses, and still continues to take that position today.

Shortly thereafter, the SEC allowed corporations to choose a notice and access regime for delivery of proxy material. In 2015, the SEC put forward an expansive set of regulations covering mutual funds and other registered investment companies, including Rule 30e-3, which proposed to allow posting of shareholder reports online in lieu of mailing. This complex proposal was met with opposition from groups ranging from retail investor representatives to paper-company lobbyists. In 2016, the SEC decided not to adopt Rule 30e-3.

A Forward-Thinking Approach

The challenge for everyone involved in investor communications, from regulators to financial advisors, is to deliver effective materials in ways that work for all. This requires a forward-thinking approach, embracing new design and delivery options to serve the diverse generations on either end of the spectrum.

Millennials are a large, complex group — 92 million millennials, compared to 77 million boomers — and they’re entering their years of peak purchasing power. Millennial investors balance a desire for control with newer technologies like mobile trading and robo-advice (IBD). Simultaneously, millennials are active, engaged consumers of mail, even more so than non-millennials (USPS). Meanwhile, boomers demonstrate different financial habits than digital-native millennials, but still spend substantial time consuming information online.

The old ways of mailing print documents or emailing links to difficult-to-understand documentation don’t comprehensively meet the needs of investors from any generation. The best path for the future lies with providing well-designed, accessible information to investors in any format they choose.

Regulations must keep up with investors’ changing technology preferences and remove obstacles for all involved. SEC Commissioner Kara Stein recently commented, “We still generally take a ‘one-size-fits-all’ approach to disclosure as investor protection. I think we can and should think about whether we can do better.”

We’re in a constant state of change. Issuers are increasingly enhancing print documents and carrying forward more user-friendly designs into their electronic versions. Financial advisors are providing investors with faster and easier access to information, in multiple formats. Technologies continue to develop that provide all industry players with new ways to communicate. Empowering investors with information how and when they want it is the best way to serve the entire market.


Sherry Moreland is Mediant’s President and Chief Operating Officer.

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