Financial Sales and Advice for Millennials

A huge gap exists between the need of Millennials for financial guidance and the skills and resources of bankers to provide it. That leads to bad experiences that hinder growth. With Millennials now the largest demographic group and in their prime earning years, banks need to find ways to close that gap before others do. Here’s how they can do it.

Born between 1981 and 1996 and numbering over 75 million, Millennials have become the largest demographic group in the US, according to the Brookings Institution.

Millennials are better educated than any other group and are entering their prime earning years.

Banking and financial services companies that acquire and expand wallet share with this group will be positioned for market dominance in the new decade.

The Millennial opportunity

Millennials didn’t have it easy, growing up amid financial and global upheavals — 9/11, the dot com bust, the Great Recession.

No wonder they are in financial doldrums:

• Millennial wealth levels were 34% below what they would have been without the Great Recession of 2008, making them the slowest cohort to recover from the downturn, according to the Federal Reserve.
• They have the highest student loan debt, twice the average of Gen X, Experian notes.
• 53% have credit card debt and only 36% have a retirement account, per a GFLEC study. Among those with retirement accounts, 31% are borrowing from it or raiding it for cash.
• Only 30% of the Millennials are homeowners, according to SmartAsset Report. Moreover, they have to pay 39% more than boomers to buy their first home, while dealing with soaring rents. It can take them nearly a decade to save for the 20% down payment needed for home purchases.

There’s more. Only 24% of Millennials have basic financial literacy and a meager 8% have advanced financial literacy, the lowest among all generational groups, GFLEC says. This is not a surprise, given that only 12% of Millennials have sought financial advice for debt management and 27% for savings and retirement, PwC reports.

All that said, Millennials are the largest and the most educated demographic group. This presents a huge opportunity for forward-thinking banks and credit unions to gain market share through personalized advice and guidance.

Gen Z is tempting for banking, given the generation’s fresh eyes and wallets. Yet Millennials are so far the largest and most educated group. Don’t forget them.

State of banking sales and guidance

Selling to Millennials presents a critical imperative and a compelling opportunity, but banks struggle with a wide variation in sales performance. Per the Boston Consulting Group, top sales reps in retail banks perform eight times better than the bottom reps in sales conversion and new account acquisition.

We list some of the reasons for this.

• Financial products keep proliferating at a rapid pace.
• One needs a PhD to understand financial concepts, products, features, and regulations — loan amortization, debt to equity ratio, compounding, digital services, and so on.
• Millennials and Gen Z, an increasingly growing part of the sales workforce, turn over at a faster rate than older workers.
• Millennials and Gen Z have short attention spans. While Millennials have an attention span of 12 seconds, Gen Z has a “gnat” attention span of eight seconds, reports cultural intelligence company Sparks & Honey. They also hate training, preferring to “learn on the job” instead — 65% of Gen Z say so, according to Capita.

Verbatim: What financial services executives say about the state of sales

“We have a structural problem. Most of our young, financially struggling customers never encounter a banker skilled enough to help them. All the best bankers are decked against the affluent segment.”

“Every bank is worried about inappropriate sales practices and being the next Wells Fargo.”

“I have to be honest, most of our branch bankers are just order takers. We spend lots on training to move beyond that, but so far, we have not succeeded.”

“Our bank’s strategy is to advise our customers. The problem is we have not yet equipped our bankers to successfully deliver the strategy.”

It is evident that most banking sales reps have become either brute-force product pushers or passive order takers. Apart from generating bad publicity and mistrust in professional financial advice, they are also missing the golden opportunity to grab Millennial market share by getting them from woes to wellness with personalized advice.

Transforming financial sales and advice

You may have seen this with Uber and Lyft. Any driver is able to take you from Place A to Place B regardless of his or her navigational skills, thanks to GPS-enabled, real-time driving guidance. Likewise, in-band guidance during the sales interaction, powered by artificial intelligence and knowledge, provides step-by-step real-time conversational guidance to agents, making all sales agents — even novices — as good as the best.

Such AI-powered tools facilitate quality sales conversations that can be scaled cost-effectively. More specifically they automate conversations through a “banker bot” and augment agents, in the case of human-assisted advice, across channels, including digital, call center, and branch. That enables consumers to easily switch across channels during the course of conversations. Sales agents in turn have an omnichannel view of customers.

Unlike rigid scripts and brittle decision trees that break down when the customer takes the conversation in an unexpected direction, an AI-powered platform adapts to the conversation and, in some cases, can work with incomplete or imprecise data. This level of capability makes financial guidance and coaching available to price-sensitive, digital-first Millennials.

AI-guided sales and advice at work

Let us take the case of getting Millennials ready to buy a home. The AI advisor will guide the assessment session to recommend a prioritized action plan to the customer with successive next best steps (reducing debt, increasing their credit score, or saving for a larger down payment). The bot will also check in with customers as they execute their plan, encouraging progress and celebrating success. The process repeats until the customer is ready to buy a home and eager to discuss mortgage options. In other words, the real-time assessment guidance and ongoing coaching creates demand for the financial institution’s mortgage offerings.