APEX Insights > Your Business > What Millennials want in advice and insurance

16 March 2018

What Millennials want in advice and insurance

Successfully engaging Millennials is critical to future-proof your business, writes Zoe Fielding.

Telstra’s survey, Millennials, Mobiles & Money: The Forces Reinventing Financial Services found that the generation’s financial priorities were to:

  • save for the future (a primary concern for 82 per cent of Millennials)
  • reduce debt and own a home (also top of mind)
  • insure their home, car, contents, income or life (a priority for two out of three).

Many Millennials shun traditional insurance products purchased through traditional channels. (One reason is that insurance – particularly life cover – has a poor reputation among consumers in general: only 42 per cent believe they could rely on their life insurer when needed, reported PwC in its 2017 Future of Life Insurance in Australia report.)

Assessing their wealth

Millennials are now the largest demographic group worldwide, according to Telstra’s report.

In Australia, Millennials are predicted to make up as much as 42 per cent of the workforce by 2020. Their combined income has already topped that of the Baby Boomers, and their spending power is estimated at $US10 trillion globally.

Add inheritances to this over the coming years and Millennials’ personal wealth will balloon. Their share of global financial assets is forecast to hit 28 per cent by 2030.

Unsurprisingly, financial-services businesses – including insurers and advisers – are taking note. Successfully engaging Millennials as clients is critical to their future profitability.

The challenge for businesses is that Millennials – used to the speed, convenience and flexibility offered by the internet and mobile devices – have high expectations of service providers that often cannot be met using established models.

Where they’re looking for advice

Telstra’s research found that insurance advisers seeking to build relationships with younger consumers face a hurdle – most Millennials prefer to receive advice on financial products and services via mobile and digital channels.

They believe digital advice offers greater independence than advice given by a person: they look first to social media and online sources for information and advice on financial products.

Telstra also found that high-tech providers are also seen to offer greater speed, convenience, flexibility and customisation than traditional providers – all features that appeal to Millennials.

These preferences give room for fintechs to enter the market and actively compete against established insurers and advisers for Millennials’ business.

Online insurance service Trōv recently partnered with AAI, which underwrites Suncorp-branded policies and processes claims, to offer instant insurance cover for possessions through a mobile app. The service offers flexible, tailored policies at the customer’s point of need. The easy-to-use mobile interface employs familiar functionality.

But accessing life cover through such channels could leave Millennials exposed.

Telstra’s research notes that disruptors don’t have to be the best; they don’t even have to be good. They just need to be cheap and good enough to buy time for new entrants to build market share and improve quality.

Financial advisers’ opportunity

Traditional advisers and insurers can engage with Millennials who are searching for more than this. Many would like to have a true partnership with their financial-service provider but find what is on offer fails to meet their standards, Telstra’s research found.

In their relationships with financial providers, Millennials demand:

  • genuine value
  • personalised advice and services
  • the flexibility to customise product offers
  • support
  • connections at an emotional level
  • independence
  • privacy and security of finances, personal data, and financial interactions
  • trustworthiness, especially a solid reputation for data security
  • real-time, multi-channel interactions
  • automated services.

While digital providers may have an advantage when it comes to convenience and customisation, advisers have other strengths, including their ability to offer personal advice and emotional support. Millennials place a high degree of trust in established brands – notably banks – to deliver privacy and security, Telstra’s research shows.

Advisers and insurers who can integrate tailored services through digital channels into their businesses, backed up with in-person support when appropriate, will have the greatest success in partnering with Millennials.

 


Related Articles

YOUR BUSINESS

Why it pays to target Generation X

July 2018


 

This material is intended for the use of financial advisers only and is distributed by OnePath Life Limited (OnePath Life) (ABN 33 009 657 176, AFSL 238341).

The information, opinions and conclusions in articles ("information") are current as at the date articles are written as specified within but are subject to change. The articles are provided and issued by OnePath Life unless another author is specified in the article, in which case it is provided and issued by that author. The views expressed are those of the authors only and do not necessarily reflect the opinions or views of OnePath Life, its employees or directors. Whilst care has been taken in preparing this material, OnePath Life and its related entities do not warrant or represent that the information is accurate or complete. To the extent permitted by law, OnePath Life and its related entities do not accept any responsibility or liability from the use of the information.

The information is of a general nature and has been prepared without taking into account a potential or existing investor’s objectives, financial situation or needs. Investors should consider whether the information is appropriate for them having regard to their objectives, financial situation or needs. For any product referred to above, OnePath Life recommends that investors read any relevant offer document or product disclosure statement and consider if the product is appropriate to them. For products issued by OnePath Life, these documents are available at www.onepath.com.au.

Past performance is not indicative of future performance and any case study shown is for illustrative purposes only. Neither are a prediction of the actual outcomes which will be achieved. Where tax or technical information is included, the information is our interpretation of the law and does not represent tax advice. An investor is advised to obtain professional advice relevant to their individual circumstances.