It wasn't that long ago that large elements of society were confused and confounded by millennials, their focus on seeking adventure and experience, and penchant for avocado on toast.
But the elders of that generation are now a long way away from that stereotype, marching into their 40’s with all the trappings of previous generations at that age; a house with a mortgage, young family, flourishing careers, some accumulated wealth if not accumulated financial complexity, and because of all that are seeking financial advice - very frequently from a human.
We have seen this before, the silent generation were undoubtedly unhappy with their boomer offspring, especially when they were embracing the many countercultures of the 60’s and 70’s but the boomers quickly settled into position of stability from where they could look scornfully at Gen-Z and the millennials in their excitable and instant gratification-seeking youth.
The offer of a dry cave and a warm fire might have been replaced by ‘Netflix and Chill’ but the cycle remains the same.
This time, it’s different
These are the four most expensive words in the English language according to fabled investor Sir John Templeton, and observing and listening to some of the digital investments being talked about in financial services I think he is correct.
The fact that Zoomers, Gen Alpha and all that follow will be tech-native is irrefutable, but their search for instant gratification via likes, shares, streaming, gaming and any other digital dopamine delivery mechanism isn’t a forever trend. Much like the generations before them they will metamorphosise from today’s thrill seekers to tomorrow's steady Eddies because of a force much more powerful than technology: love.
The cycle of life can be overly simplified into birth, learn stuff to get a job, enjoy the freedom of youth, fall in love, do sensible things in order to protect the life you have with the one you love, (in many cases) instigate the cycle for another generation and do more sensible things to keep them safe until they grow up and then ideally have time to relax and reflect on all that was accomplished before the journey ends.
The fun times of our youth are filled with experience seeking and risk taking, irrespective of whether you are a boomer, millennial, zoomer or beyond but falling in love changes everything because once embedded, each half of the couple thinks about their partner's happiness and security, and with that a large part of their satisfaction assessment moves from instant gratification to deferred gratification, deferred either to a later point in time or to another person.
This happens because there are some things that seem to be hardwired into all of us. Whether you believe in Maslow’s hierarchy of needs or whether you just open your eyes and observe those around you, there are significant, almost universal changes to our behaviour and priorities when we find ‘the one’. Technology evolves throughout our lives, it augments, makes things easier and often faster but it is vanishingly rare for it to actually change any element of this cycle; the offer of a dry cave, warm fire and telling stories with paintings might have been replaced by ‘Netflix and Chill’ but the cycle remains the same.
‘Our favourite holding period is forever’ Warren Buffet
This point is absolutely crucial for private client financial services so much so that its patron saint should be St. Valentine. With the exception of current accounts nearly every private client-facing product in financial services delivers future benefits whether it's buy a house and be free of the debt in 25yrs, or save now for a happy retirement in 25yrs, or protect yourself against something nasty happening in the distant future or never at all, it’s all deferred gratification. Although it can seem worthless when you are living for the moment, its value arrives as a lightbulb moment when a secure future includes providing the same benefit for other people too. Critically, it’s only when people see the need to plan for the future that they have this lightbulb moment.
But must this time be different? So much has been said about zoomers et al and their forays into meme stocks and crypto, so surely that means they are deeply engaged in investing and we should be courting them as clients with gamified digital solutions?
Many zoomers look at meme stocks and crypto assets as a cheat code, a quick way to reach the next level. This started during lockdown with time on their hands, a surprisingly buoyant market, no places to go and as a result money to spend, and was fuelled further in chat rooms and by ‘finfluencers’ who engage with their audience by tapping into the desire for a quick win that beats the odds, the ultimate cheat code. But 9 months into a global financial turmoil that has crushed many memes and destroyed some of the favourite cryptos and exchanges and the noise has died down and the bubble, just like previous ones, has deflated, and this can only be a good thing.
And yet we’re seeing firms start to offer services or allocate vast sums of money to cater for some other fad or bandwagon. Three years ago, would you rather have spent multi-millions on a fad or on a better customer experience? Clearly one option is motivated by the instant gratification brought by short term profits, and the other by a more mature understanding of what actually brings long term success.
Building technology to offer services that fly in the face of every investment lesson the financial services industry is built on is a stunningly dangerous strategy that risks the money invested in tech, the money invested in the markets but, most importantly, gambles with trust in financial services, which is something that must pass on to each generation if we want them as our next clients.
If I am correct, even just a little bit, and if love is the most powerful ‘finfluencer’, it’s time to rethink where investments in technology should be made in order to deliver the greatest possible long term attraction.
