A major point that incumbent firms seem to overlook when considering younger investors is that while overall assets are comparably small now…
Important consideration for advisors and incumbent firms is not only the upper hand startups are getting in terms of designing specifically for a younger audience, but doing so ahead of the great wealth transfer. Product strategy and shifts in business models and the delivery mechanisms being implemented by startups are also designed specifically to appeal to younger investors.
Mobile Is Core
Time spent consuming digital media on mobile continues to increase and is already an hour beyond that of time spent on desktops or laptops among adults. In 2017 adult users were spending an average of 3.3 hours daily consuming digital media content based on data from a 2018 Kleiner Perkins trends report. Meanwhile these same users were only spending, on average, 2.1 hours consuming digital media on their desktops or laptops.
Startup Apps Outperform Incumbents
When it comes to satisfaction, millennials are significantly happier with the mobile apps of the startups than incumbent firms, Wong said. A CB Insights analysis using IOS App Store ratings data tracked by App Annie found far more five-star ratings for Wealthfront, Robinhood and Acorns than the mobile apps of Schwab, TD Ameritrade and E*Trade.
Wong pointed out that the startups made better use of clean interface and user experience in their design than the incumbents and also engaged in gamification as a tactic.
Wong put up a slide of Wealthfront’s (Path) Home Planning features, which utilize design features more characteristic of that found in video games as an example of this type of design thinking.
So Does Commission-Free Trading
As was born out by Robinhood founder Vlad Tenev during his fireside chat, younger generations are crazy for commission-free trading; interesting to note that the data for this slide is based on Schwab’s 2018 Investor Study.
Even Startups Will Need to Evolve
Many of the investing startups catering to younger investors do just that: listen to and thereby actually cater to their clients’ desires in their planned build-out of new features and products.