Wealth management services that millennials want

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As millennials near 30 or even 40, they’re becoming prime targets for financial planning and wealth management services. Here’s how some community banks are offering engaging wealth management services tailored to the needs of these digital natives.

By Cheryl Winokur Munk


Community banks realize that they need to attract millennials to thrive. That’s a given. And as this generation enters its 30s and nears its 40s, wealth management can be an opportunity to achieve this goal. Many community banks, however, have been slow to grasp this opportunity to gain long-term millennial customers or deepen their relationship with existing customers.

Some community banks have an in-house brokerage or contract with a third party, but not many offer a full array of wealth management products and services, whether through a full-service registered investment advisor (RIA) or through self-directed digital options like robo-advisors, which are becoming popular with digital-native customers.

Offering these types of services—and paying attention to this generation’s need for wealth management expertise—represents a real and necessary opportunity for community banks, industry observers say. If millennials can’t find these services at their current banks, they’ll simply look elsewhere for these services, and eventually their traditional banking business will follow.

“If you don’t win them now, you will not win them in 10 years or 15 years,” says Andrew Au, cofounder and president of Intercept Group, a marketing consultancy specializing in digital transformation that is based in Toronto and Boston.

There are signs the industry is starting to move on wealth management for millennials, but challenges persist. “Banks are talking about it more now than they ever have, but finding solutions continues to be a struggle for many,” says Jeff Zimmer, first vice president, OSJ and program manager at $721 million-asset Bankers’ Bank in Madison, Wis.

How, then, can community banks court millennials with wealth management offerings? It starts with having a robust wealth management offering, experts say. To build up a wealth management offering quickly, some banks have been exploring partnerships with established RIAs as the industry moves away from commission-based business toward a fee-based model. Others have turned to digital wealth platforms to meet the needs of a younger clientele.

Partnering with a third party for a referral agreement can make a lot of sense, because the bank doesn’t have to create an RIA or broker-dealer from scratch, according to Margaret J. Hartigan, CEO and founder of Marstone Inc., a digital wealth management platform in Providence, R.I., that works with community banks. She says that while the costs are minimal to the bank, the rewards are plentiful.

To attract millennials, banks need to adopt a digital mindset, says Evan Kulak, cofounder of Polaris Portfolios in Wellesley, Mass., which offers digital wealth services to community banks. In many cases, he says, millennials are more likely to go to the bank’s website than they are to walk into a branch, at least initially. “Banks need to service the clients in the way they want to be serviced,” Kulak adds.

A road map for success

Ideally, community banks should seek to offer a combination of traditional and digital wealth management tools, says Mike Kerins, founder and CEO at RobustWealth, a provider of digital wealth management solutions to advisors and institutions, in Lambertville, N.J.

It’s the same concept as in the retail industry, he says; sometimes people want to go to the store, and sometimes they want to buy online. The goal is to allow millennials to interact with their community bank on their own terms. As Kerins says, “It’s not one or the other.”

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As community banks are having these discussions, it’s important to consider how they can be most helpful to millennials and what products and services this generation is most likely to be attracted to. One idea is to consider products that can help alleviate the high loads of student debt that many millennials are still carrying. For example, Kulak says, they might appreciate a wealth management feature that automates their dividend payments on taxable investment accounts to help pay off their student loans.

For other ideas on how best to serve millennials, Au recommends that community banks seek direction from popular personal finance applications, such as Acorns (micro-investment), Robinhood (stock trading), Level Money (Capital One’s personal finance app) and Mint (financial management). This generation views these apps as accessible and achievable, which millennials find especially valuable, Au says. Generally speaking, banks provide information, whereas these apps provide insight, he says.

He advises community banks to provide more predictive and personalized financial advice. One example would be to reach out to customers with information on how much they can afford to spend on a house based on their age, demographic and balance. Banks could also look at spending habits and identify inefficiencies in spending that, if solved, could have a meaningful impact on customers’ lives, Au says. Doing an analysis of how much a customer spends in ATM and other fees could provide a much-needed service to a younger customer.

If they aren’t already, community bank executive teams should get in touch with the emerging technologies out there that would help their banks provide predictive and personalized advice to customers. Au adds: “The cost of this technology comes down substantially every year.”

4 tips for courting millennials

Numbering nearly 80 million people in the U.S., millennials form the largest generation ever, according to a 2018 report from Harland Clarke, a marketing and payments services provider in San Antonio. Engaging them takes work on a community bank’s part, but there are ample reward opportunities.

When financial institutions actively engage millennials, their share of wallet goes up significantly, the report notes—to the tune of 25% or more.

Here, then, are some ideas gleaned from the report to help community banks attract millennials and keep them engaged throughout their financial journey:

  1. Engagement is critical. Focus on the financial issues that millennials are having and offer them tools to monitor and control their financial planning, budgeting and spending.
  2. Offer appropriate rewards and incentives. Find things that appeal to millennials, such as travel, and incorporate them into your offerings. Consider the fact that a whopping 83% of millennials would be willing to switch banks for better rewards.
  3. Be upfront about fees. Hidden costs are a real turnoff to millennials, so tread carefully.
  4. Communicate appropriately. Millennials don’t want to be told what to think. Seek to become a trusted advisor who listens to their needs and responds.

How community banks are reaching younger customers

Many community banks are still in the early stages of developing a wealth strategy that relates to millennials. But some are making headway.

Bankers’ Bank, a provider of banking services to community banks in the Midwest, has been working with its clients to develop products and services that appeal to millennials. One viable option may be the robo-advisor route, Zimmer says. Another suggestion is for community banks to offer the services of a financial planner on a fee-per-hour basis. This allows millennials to benefit from wealth management services with more flexibility to pay for services, says Zimmer, who heads the wealth management division at Bankers’ Bank.

Bankers’ Bank has also helped banks develop educational materials that teach the next generation about wealth management in a way that’s relevant to them. Topics include financial goal-setting and saving for retirement from a young age amid competing financial priorities. Banks are encouraged to use millennial-friendly mediums such as podcasts and short videos to relay these messages.

The idea, Zimmer says, is to empower younger customers to pick and choose among the things they want to learn. Millennials don’t always want to come in for a series of in-person meetings and wade through stacks of brochures, handouts and paperwork. After all, many millennials are short on time, with small children, demanding careers or both. Bank messages, therefore, need to be steeped in technology. They should be chock full of information, quick to read or watch, and available at any point in time, Zimmer says.

Reaching out on all channels

For $500 million-asset Ledyard National Bank in Hanover, N.H., digital communications have been a major focus in its efforts to attract millennials.

For instance, the community bank started publishing brief monthly and quarterly digital newsletters that are written in a legible and easily digestible format. The newsletters address topics like health savings accounts, taxes, 529 plans and the importance of building financial wealth. Ledyard National Bank then posts them on social media sites in the hopes of engaging a younger crowd online. The web format is important to digital natives, who often aren’t reading printed materials, says Kathy Underwood, the community bank’s president and chief executive.

The bank has also begun experimenting with the use of videos on its website, a medium millennials tend to appreciate. It’s also considering how to offer self-directed investment tools to millennials who want them, in addition to the array of wealth management services it already offers, including brokerage, trust and estate planning, tax planning and insurance planning.

In addition, Ledyard National Bank offers a financial aggregation tool similar to Mint that the bank recently upgraded with additional functionalities to make it more user-friendly for tech-savvy customers. And the bank offers a socially responsible investing fund, which has been very popular, particularly with younger investors, Underwood says.

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There are significant opportunities for banks to shift their marketing to attract millennials, she says. A few years ago, Ledyard National Bank made the decision to reach out to the children and grandchildren of existing customers and branch out from there. “That’s what we’re in the process of doing, and you’ll start to see more coming from us in that area,” Underwood says.

Sandy Spring Bank in Olney, Md., is also proactively targeting millennials. While other banks might charge several hundred dollars to do a financial plan, the $8.4 billion-asset community bank offers free financial planning to millennials in the expectation that it will result in strong, long-lasting customer relationships. (Editor’s note: In September, Sandy Spring Bank’s asset size rose to $11.2 billion after its acquisition of Revere Bank.)

Sandy Spring Bank also targets millennials with its retirement planning, trust services, estate planning, mortgage banking and insurance services, says R. Louis Caceres, Sandy Spring Bank’s executive vice president for wealth management, insurance and mortgage. He says that even though millennials tend to have lower investable assets, it’s a misconception that the generation doesn’t have any money to invest.

In fact, Caceres says one of Sandy Spring Bank’s more successful products with millennials is its Smart Investment Management Account, which requires a minimum balance of $50,000. The account is invested in a portfolio of various securities, including mutual funds, exchange-traded funds and common stocks.

The community bank also offers educational seminars on topics relevant to millennials and runs complimentary seminars for clients, businesses, community partners and their employees. It plans to roll out a mobile app for wealth management by year-end and is entertaining the idea of a digital option for do-it-yourself-minded investors.

Targeting millennials offers Sandy Spring Bank significant cross-sell opportunities, Caceres says. There are key moments to have discussions about homeownership, asset protection and the power of dollar-cost averaging, for instance.

It’s also a business that feeds itself. Satisfied customers have been a major referral source for new millennial customers, he adds.

Banks that expect to be around for the long term can’t ignore this demographic, Caceres contends. “You really have to invest and be patient.”

The power of combination accounts

Through a series of focus groups, fintech company SigFig has found that millennials are often not investing outside of their 401(k) even though they have accumulated enough assets to do so. These focus groups pointed to a lack of awareness of investment opportunities that might be available to them.

“That’s the power of community banks. There’s just a big opportunity there,” says Dan Mercurio, general manager of banking at SigFig, a firm in San Francisco that offers digital advice platforms to banks. “The banks that are local to them have a huge opportunity to present some of this innovation in a way that resonates with them.”

One way to attract these assets to the bank is to offer an account that more seamlessly integrates a checking, savings and/or investment product. It’s an idea that several of SigFig’s banking clients are exploring, Mercurio says.

Certainly, combination accounts are a growing trend—even among fintechs. Robo-advisory firm Betterment in New York City recently launched Betterment Everyday, a savings platform and checking account. The checking accounts will be provided and issued by $719 million-asset nbkc Bank, a community bank based in Kansas City, Mo. The offering represents the robo-advisor’s first foray into traditional banking products.


Cheryl Winokur Monk is a writer in New Jersey.

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