How savvy financial firms are repositioning for the under-50 market

New investment service providers are targeting under-50 demographics to cater to a new client base which favours digital procedures.

A new breed of investment service provider is tapping into a younger client base often neglected by more traditional financial services companies focused on the lucrative baby boomer market.

Stockspot, a pioneer of the so-called ‘robo-adviser’ model in Australia, has experienced a rapid uptake by Generations X and Y, many of whom have become disengaged from larger fund managers and banks.

Stockspot’s chief marketing officer, Larry Lee, says financial services companies are lagging behind other industries when it comes to servicing the under-50s.

“Most still speak in financial jargon, offer confusing complex products and are very cautious of social media. Younger investors are used to doing everything digitally – yet many organisations still have legacy processes that require paper forms, physical signatures or the need for you to pop into the branch,” he says.

To invest with Stockspot, clients simply fill out a questionnaire about their attitude to risk, investment goals and personal situation and an automated adviser produces a low-cost portfolio to suit them.

Rather than the lengthy product flyers and complex messages often used by large fund managers, Stockspot favours transparency and a lack of financial jargon. Its website and advertising feature simple infographic-style imagery and plain language. Investors have also been attracted by its fully online experience with no paperwork.

When it comes to investing, Lee says younger clients value the opinions of friends and online communities over professionals and many like to do their own research. “Social media, especially Facebook, and online forums have probably been the most effective channels for us in attracting younger investors. Social proof is a major factor for this market when it comes to product discovery and purchasing decisions,” Lee says.

Stockspot is also running an advertising campaign across offline, digital and social media, which focuses on its belief that investing should be hassle-free without the high fees associated.

Melbourne financial advice firm Experience Wealth is another business that is focused on targeting wealth accumulators. The company only works with clients in their 20s, 30s and 40s. Experience Wealth employs a team of young financial advisers, setting itself apart from the broader financial planning market which favours older advisers to service older clients. Its marketing heavily features images of its target market, young professionals and families, rather than the typical clichéd images of silver-haired retirees strolling on the beach.

Experience Wealth managing director, Adele Martin, says the idea for the business came after spending a decade working with retirees.

“I would hear them say ‘I wish I saw you years ago’ and I knew that if I were to truly make a difference in people’s lives I would need to work with them years before retirement. This is why we don’t work with people over the age of 45,” she says.

Experience Wealth specialises in helping clients to tackle issues such as household expenses and debt management. The majority of client meetings are held virtually, which allows the business to help clients all over Australia.

Martin is passionate about marketing and has been heavily involved in the marketing strategy, which is helping the fledgling company to pick up three new clients each week. Much of this business has come through Facebook, which it uses for both an invitation-only private group and for advertising to promote Ebooks including ‘Five Secrets to Building Wealth In Your 30s’. Experience Wealth also conducts money masterclasses live and via webinar and has just started using Instagram.

In addition to Experience Wealth, Martin has developed another business, Your Spending Coach, to help other financial advisers to market to a younger client base.

“Lots of advisers want to work with Gen X and Y but they don’t know how,” she says. “They come to us for advice on how best to reach this market.”