Why millennials are turning to super and investment platforms

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For millennial investors, technology is allowing them to take charge and get hands-on with their investments.

Millennial investor and popular podcaster, Glen James, says the game has changed for his generation when it comes to both investment options and appetite. Investors are hungry to build their wealth earlier and know they can approach it in a number of different ways.

"Twenty years ago, there weren't that many options for superannuation or investing, so you usually had to stick with the basic options," says James, the host of My Millennial Money.

Why millennials are turning to super and investment platforms

"Companies would take that for granted and say, 'Oh we've got these customers tied up, we don't really need to innovate as much because they're not going anywhere'."

Today, young investors have so much choice when investing their super and savings, from super and investment platforms, low-cost share brokerage services, traditional super funds, full-service brokers, SMSFs and even a growing group of financial advisers who are starting to take notice of the generation.

Unlike traditional wealth services of years gone by, this new breed of super and investment options is often technology-led, a non-negotiable for anyone who has grown up using Facebook and YouTube.

"Because in this day and age, if you make it hard for me to use your stuff, you've lost me," he says.  "Today, good investment options coupled with good online reporting, an easy-to-use app - this stuff is starting to become hygiene," James says.

The rise of the super and investment platform

Matt Heine, joint managing director of Netwealth, a rapidly growing ASX-listed super and investment platform, says the millennial market has access to more intel than any generation before them, which places an onus on providers to meet the challenge of meeting their desire for choice and transparency.

Super and investment platforms like Netwealth give investors exposure to a variety of asset classes including Australian and international securities, managed funds, managed accounts and even term deposits.

A key difference between these platforms and traditional super funds is the flexibility investors have to choose how their retirement savings are invested, Heine says. For example, following the Black Summer bushfires that tore across NSW, Netwealth saw a spike in investors seeking access to more environmentally friendly or ESG-focused investment options.

"People are actively looking for ways that they can invest their money to have a positive social impact and to avoid negative social impacts," he says.

While platforms have long been a key part of financial advisers' toolbox due to their ability to simplify the management of multiple portfolios, Netwealth's data shows they are increasingly being used directly by millennial investors. For example, Netwealth has seen a growth of 200% in the number of accounts held by millennials from July 2018 to August 2021, with account balances also growing from approximately $60,000 to nearing $100,000.

Instant access and the role of financial advisers

While some millennials have taken to crypto-currency trading and others are trying to cash in on the post-COVID market boom using low-cost trading platforms, many make it their hobby researching share markets and managed funds in a bid to set themselves up for the long term, says Heine.

"They have built out financial plans, and they're very clear on what it is that they actually want to achieve in the medium and long term. Whether that's saving for a new house, going on holidays (pre-COVID) or building an investment portfolio," Heine says.

As with other generations, Heine has seen that many millennials are also happy to engage with a financial adviser for help. However, the style of relationship looks different. They are looking for a digitally led relationship and one that is built around partnership.

"They want the relationship to be more like a high-performance coach, so they can actually improve themselves and develop themselves as investors," says Heine.

Corey Wastle, financial adviser and CEO of Verse Wealth, a financial firm focused on people, value and impact, says millennials behave differently to other investors. Instead of looking for a full-service ongoing financial advice relationship, they are largely looking for strategy and help in goal setting.

"We do a project with most of our younger clients where they come in and out of the financial advice experience in around 100 days, with a strategy in place," he says.

Wastle says there is a strong desire from his younger clients for insights into their broader financial life, which is an opportunity for platform developers.

"I think [platform providers] want to start looking at how they can have the client engaging with their whole financial life, which includes things like assets, liabilities, and cashflow, their portfolio, their goals and intentions, and tracking and measuring their financial wellbeing," he says.

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Kate Cowling is a multimedia journalist and editor. She has worked for the Australian Broadcasting Corporation and Fairfax Media (now Nine) across digital, print, television, and radio. Her byline has also appeared in Professional Planner, Money Management, Travel Weekly, and B & T. She was previously the editor of Professional Planner and the news editor of Smart Investor.