Where do millennials learn about finances? Hint: Not the bank
For many generations, your bank — which was likely also your parents’ bank — was your main source of financial wisdom. If you had a question about applying for a loan or anything related to money, chances are you would have headed to your local bank branch. But no longer. Financial advisers, who were once the second most-sought-after sources of money-related knowledge, are now at the bottom of the list for millennials — dropping in popularity from 40 per cent to 14 per cent in the span of one generation. For millennials today, spouses come first, then their parents.
This trend is perhaps indicative of a desire for a personal and relatable experience when it comes to finances, something that may not have been a requirement in Gen-X’s time but certainly is now.
Sean Cooper, a millennial personal finance journalist (whose upcoming book Burn Your Mortgage describes his personal experience of paying off a mortgage and achieving financial freedom), sees the rise of technology as contributing to a more personal and convenient experience.
“Millennials are a techsavvy generation. They want 24/7 access to information that they can get on their smartphone or tablet through mobile apps. Instead of meeting in person or speaking on the phone, they want to meet advisers on their own terms, whether that’s through Skype or text.”
According to the Millennial Disruption Index, one in three millennials believe we won’t need a bank at all in five years. The same percentage of millennials are open to switching banks in the next 90 days, an indicator that this shift may be more immediate than expected.
This erosion of trust in banks suggests that they may be slow to adapt to the changing needs of millennials, who are less trusting of traditional institutions, more willing to shop around and more open to change.
Jessica Moorhouse, a millennial money expert and host of the popular Mo’ Money podcast, believes that the generation gap plays a role in this trend.
“Compared to our parents, what we want out of life is completely different. We’re not chasing the white-picket-fence dream; it just isn’t something that most of us want. That was the dream of a past generation, and because our values are different, so are our finances. That’s why the advice that we get from older generations doesn’t always resonate.
“Growing up, I got advice from my parents, but as I went through university and started using my own money more, I started putting more trust in my peers and talking to people at banks because I assumed that since the people working there are advisers, they had my best interests in mind. Of course, I soon realized that their main interest was to sell. So I moved on.”
Financial fitness coach and credit score expert Chantel Chapman adds, “Things are much different now than how they were in terms of debt, affordability and our savings goals. It’s about new experiences now, not necessarily home ownership or having kids.”
With this focus on experience in mind, Chapman created the Adulting 101 event series to help bolster the content and events arsenal for Mogo, a fast-growing Canadian digital financial brand.
“Millennials grew up with two things that are significant: the Internet and the economic downturn. With the Internet, you can do extensive research before making a decision; that’s why they’re less likely to just blindly follow a triedand-true method and rely more on social proof,” Chapman says.
“And with the economic downturn, it’s hard to watch that unfold and not be wary of banks and financial institutions. It also doesn’t help that banks haven’t quite captured a compelling way to teach people about finances.”
Another example of a new financial company targeted at millennials that is quickly gaining popularity is Wealthsimple, an online investment management service. Not only does it place considerable importance on design and experience, but — like Mogo — it has also made social responsibility a focus.
Wealthsimple offers portfolios featuring environmentally friendly companies, while Mogo offers a free credit score for its customers to check their financial health.
Millennials have high expectations for the brands they interact with, even when it comes to traditionally stuffy industries like finance.
A poor experience with passable customer service may have been acceptable a decade ago. But with so many better options available, that is no longer the case today.
However, that is not to say that banks are completely irrelevant. Cooper recommends using financial advisers at banks as a starting point, with a healthy dose of wariness.
“Your bank can only make recommendations based on the products and services it offers. If you’re looking for a mortgage, your banker probably won’t tell you that you can find a lower mortgage rate at their competitor down the street. So it’s important to have more than one reliable source of information.”
Fortunately, there are a few other equally effective sources of financial wisdom for millennials. Financial blogs An infinite range of online content, often consisting of advice that is paired with relatable stories. Friends They’re going through the same thing as you and might have had time to do more homework.
Family They’ve got valuable life experience that they’re often more than willing to share. Social networks From colleagues to friends to friends of friends, the community that you have access to is probably bigger than you know. Use it! Trusted brands Not all companies are out to just profit. Certain brands are far-sighted and care enough about customers to produce useful content and create a true mutually beneficial relationship.
For engaging tips that make it easier (and more fun) to learn about finances, check out Mogo’s blog and weekly email newsletter at mogo.ca
THINGS ARE MUCH DIFFERENT NOW THAN HOW THEY WERE IN TERMS OF DEBT, AFFORDABILITY AND OUR SAVINGS GOALS. IT’S ABOUT NEW EXPERIENCES NOW