Millennials Ditch 401k Advisors for 401k Apps

When it appears in the consumer press, it’s a reminder to get on board

How do you talk to this guy about a 401k?How do you talk to this guy about a 401k?

Hey! Guy with the man bun, hipster beard and skinny red jeans—not cool.

Millennials are ditching advisors (including 401k advisors) for apps. It’s not exactly news, but when it appears in the consumer press, it’s another reminder to industry technophobes to get on board, or else.

They want to be reached on their “ubiquitous mobile devices, which means they are gravitating to financial technology (FinTech) companies,” financial services executives say. The key is to incorporate technology in a way that enhances, rather than replaces, 401(k) advisor communication.

“Change has always been a factor with investing, but its pace now threatens to destroy some slow-moving companies and professionals,” according to a piece in the New York Post.

“Before, change was happening, but it was generational. You could adjust to it. And a business model was, in essence, immortal,” Bill Hortz, founder of the Institute for
Innovation Development, told the tabloid. In the 1950s, he noted, the average company stayed in the S&P 500 for 75 years.

“Today it is 14 years and dropping rapidly,” he said. Change is feeding on itself, and the effects of analytics and artificial intelligence will be expanding. They will dramatically change “client experiences and client interfaces,” Hortz says.

“If they don’t serve [the millennials], they will leave and take the assets with them,” addeds Brandon Krieg, one of the founders of Stash Invest.

The paper points to a recent report.

The new client has expectations of “24/7 access to information that is readily available via a smartphone, tablet or computer. Financial issues and questions that once required the advice of a certified professional can now be answered with a click on any digitally enabled device,” according to “The Advisor of the Future,” a 2015 report by Hearsay Social, a company that advises financial firms.

The report also cited Forrester Research data predicting that half of all retail transactions would be influenced by the Web as of this year.

This represents “a potential sales opportunity of almost $2 trillion,” the report said. “In addition, customers will soon be able to search for products via additional technologies, including voice and gesture commands.”

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