A tech-led game plan for millennials

The proportion of middle-class households in the US has fallen from 61% in 1971 to 51% in 2019 and the gap between higher and lower incomes has widened. India would soon have a middle class that is proportionally the size of the US today. Despite being better educated, millennials are behind the boomers and have “lower wages and fewer benefits.” They have non-linear careers – software engineer by day and blogger/tutor by night is a common millennial career path. Over a third of them have a part-time job. They want personalized experiences, they want information, control over their future and work with financial advisors and service providers who understand them and have tailor-made solutions. On the other hand, they are likely to live longer – the average human life in India is increasing (although COVID has put a stop to it for now). Longer lifespans and persistent conditions increase health care costs and policies are changing to meet these needs. As the millennials enter the workforce in this decade, they are on the cusp of changing jobs and eventually retirement planning as we know it. Automation technologies have helped to meet the challenges in the financial and accounting sector and have helped transform banks, insurance companies and accounting service providers around the world.

AI for hyper-personalized investment schemes

Personalization is the way of life for millennials. When it comes to retirement planning, many look for personal portfolio management that is based on real-time metrics such as age, gender, salary, checking accounts, contribution rate, short and long term milestones. Advanced AI technologies enable plan managers to offer such hyper-personalization – for every individual – on a large scale. In recent years, customer-facing sectors such as banking have strengthened their technological prowess to offer hyper-personalized services. Today’s AI and machine learning capabilities automatically create machine learning models — efficiently and in real time — so that customers get the easiest possible contextual experience with every interaction. By understanding the individual needs of consumers, more engaging and interesting experiences can be created. Artificial intelligence and machine learning offer the added benefit of mimicking human judgment while preserving the disciplines of rules-based investing. Investment strategies that use such grounds to exploit market opportunities tend to outperform and reduce bias errors.

Automation for consistent savings and investments

The go-getters generation may be learning the importance of saving money through YouTube videos, and they are using mobile apps, fintech and digital solutions to instill a saving habit. Today, some apps automatically transfer a fixed amount to savings every month; increase annual savings based on inflation, age, etc.; save change from every transaction in a fund; send automatic reminders and alerts etc. It is also important for financial services companies to rethink their brand image to appeal to millennials, GenX and those in the future. The younger generation believes in the greater good for all, diversity and inclusivity. To attract and retain customers of this generation, pension managers also need to use technology to engage with them.

Encouraging engagement through financial literacy

The next generation is informative and they also like to feel connected to their investments. The best way to create engagement is to provide financial learning resources, through the medium relevant to them, in the form of blogs, podcasts, ebooks, newsletters, etc. You can also get the socially conscious millennials interested in environmental, social and governance funds, recommend investments that align with their values.

Advanced analytics to serve different demographics

Millennials like to share data if it means getting an intelligent solution to their problems. Retirement plan technology can leverage this data using artificial intelligence and machine learning tools to identify patterns that help understand the retirement needs of diverse groups. By building dynamic analytics solutions, plan sponsors and administrators can adapt to the evolving needs of their participants without disrupting large-scale transformations.



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Disclaimer

The above views are those of the author.



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