Today, Millennials (those born between 1981 and 2000, also known as Gen Y) account for the largest segment of active employees in the United States workforce. With more than 79.8 million members of this cohort now earning paychecks, it is estimated that, in 2020, their buying power will increase from $1 trillion per year to $1.4 trillion annually. As Millennials’ continue to overtake the workforce and increase their share of the nation’s earned income, their influence in the workplace, in communities, and in capital markets will only continue to grow.
While Millennials’ increasing influence creates more opportunities for Gen Y investors to dominate the market, it presents added challenges for commercial real estate sponsors and firms. Unfortunately, the majority of commercial real estate owners, operators, and developers do not have the appropriate technology, tools, or understanding to effectively engage or manage this budding generation of investors. Forward-thinking firms should prepare for Millennials’ growing impact in the industry – and one way to get ahead is by considering an online investor and investment management platform, like RealPage IMS.
Millennials Demand Technology
The Millennial generation is unique because, unlike their predecessors, they grew up with on-demand technology. To them, the world has always been digitally connected, allowing them to communicate virtually via emails, text messages, and phone calls and to conduct the majority of their transactions online. Consequently, this type of upbringing has molded Millennials’ viewpoints and expectations about their investments and how they should be managed. In fact, more than ¾ of Millennials surveyed by corporate services firm Broadridge Financial Solutions say that it will be important for providers to stay at the forefront of technology. Additionally, 56% of respondents indicated that direct digital access to their investment portfolios will be important to them over the next five years.
Millennials Value Transparency
As a group, Millennials have a stronger grasp of financial issues including risks, returns, diversification, and global markets than other generations. The majority of them were between the ages of 9 and 23 during the Great Recession in 2008, and many studies indicate that a person’s investment decision-making is often rooted in the state of the economy during their adolescence. As a result, Millennials have a more innate knowledge of investment and financial decision-making as well as 24/7 on-demand access to research additional information. Because of this, they are often more wary and selective about their investments. Additionally, Millennials tend to be more distrustful of the world around them, placing a greater duty on sponsors to build trust and communicate value.
Gen Y investors see a lot of merit in online investment platforms. These platforms allow them to conveniently access their financial their info, manage their investments, and review how their money is performing at any time and from any location. This accessibility creates more transparency around open deals and reduces the potential of a deal unknowingly going awry.
Millennials Prefer Digital Communication
Millennials expect and depend upon the agility that technology provides. To satisfy these expectations, an omni-channel approach that is strong enough to cater to the evolution of technology is critical. As the number of younger investors grows, communication methods that deliver messages with speed and convenience, such as emails, mobile apps, and texts, are replacing outdated fax machines and snail mail. According to a McKinsey survey, the multi-channel delivery of financial services and information is preferred by Millennials. In fact, 57% of them indicate that they would specifically choose a high-tech investor solution, and 44% would switch to a better technology platform for their investments.
Millennials Respect Digital Innovation
Millennials are digital natives – they grew up in a world of technology, automation, and connectivity. As such, they expect digital innovation to continue to enhance their adult lives in how they work, learn, and play. As drivers of the U.S. on-demand economy, this generation stands out for its advanced use of technology and its ability to influence other generations to adopt it, too. Because of this cohort’s respect for digital innovation, firms that are equipped to provide an updated investment management platform with novel features, like IMS, have an advantage when attempting to attract this emerging generation of investors.
Download our best practice guide Are You Ready for The Millennial Investor? for more information on this emerging generation of investors and how your firm can prepare to meet their expectations.