Paralyzed by too many options and a failure to imagine their future selves, millennials need to be engaged differently when it comes to investing, a report from the OSC says.
“Getting Started: Human-Centred Solutions to Engage Ontario Millennials in Investing,” outlines millennials’ common barriers to investing and offers insights on how to overcome them.
The report builds on “Missing Out: Millennials and the Markets,” released in 2017, which found that while millennials are good savers, only half were investing. “Getting Started” examines what’s getting in the way.
Investing feels overwhelming, the report says, with too many options to consider and “industry practices that evoke skepticism and undermine trust.”
Banks’ focus on goals and milestones doesn’t resonate with millennials, it says. Robo-advisors communicate in a transparent way, but the model may not offer enough assurance for first-time investors, the report says. Opening a new account outside of a big bank can also be “a significant leap.”
Automating saving and investing through “microinvesting” could overcome the barrier to getting started but faces the same challenge of operating outside the big banks, the report says.
The study identifies six principles to help stakeholders engage millennials:
- help them find their own motivation for investing;
- make it easier to get started with personalized, achievable steps;
- make the future consequences of current decisions feel more concrete;
- offer relevant social comparisons that show what others are doing;
- build confidence through low-risk experimentation; and
- inspire trust by putting millennials’ unique individual needs first.
The principles aim to offer ideas about delivering products and services in a more “human-centred” way, the report says. “They are intended to inspire stakeholders in all parts of the investing ecosystem—from investment firms, to organizations delivering investor education, to fintech startups and others—to test new models, observe how their users respond and continue to learn and adapt.”
Read the full report here.