The millennials were born into the digital era, and as a generation, experienced first-hand the evolution of the internet, mobile phones, and other new-age technologies. Millennials typically have organised lives, make decisions carefully yet quickly and proactively network in the digital space. Unlike the previous generation, who were dependent on a single source of income, millennials have considered wealth creation by the means of investing. Now they have the resources as well as the technology to back them up, making this generation an active participant in stocks, funds, alternate funds cryptocurrencies, commodities, and more. The wealthtech sector recognises their needs and is enabling high-income group millennials with a technological sense to drive a new trend of investment.
Wealth tech startups are leveraging the advantages of technology and making the lives of millennials easier by providing total control of investment-related decision-making. These startups, being tech-enabled, have made the processes easier through the deployment of software and applications with user-friendly interfaces. Wealthtech has enabled investors to check multiple investments across asset classes on a single dashboard while reducing the hassle of signing multiple documents for an investment.
In India, wealthtech startups are available in two sections—completely digital and phygital. In the digital model, the whole process is online and the investor does not get a wealth manager. In the latter one, the model amalgamates the benefits of technology with human intervention to provide a better experience.
Empowering millennials to take risks by removing decision fatigue
Decision-making in the case of investment is a risky phenomenon, and not having the correct knowledge can result in losses. Several millennials start their investing journey by learning from the plethora of online platforms but end up in decision paralysis. Wealthtech firms are ideally placed in this market to solve this problem for their customer base, as they have the expertise of the previous investment paradigms and the support of modern-age technologies. These startups assist first-time investors to find a suitable platform to gain knowledge, reduce clutter, and clarify the concepts of investment in a hassle-free manner.
Millennials have experienced the recession of 2008 as well as the market crash of the pandemic, making them take unnecessary risks to gain profits without assessment. However, wealthtech startups take care of their clients by providing well-researched reports and enabling a level of armchair investing for them.
Expert advice is readily available at the fingertips
There are myriad investment options available today for millennials to consider. However, with more options comes complexity and responsibility. It can be daunting for some individuals to make the right choice at the right time and allocate their funds to meet their long-term and short-term financial goals. Wealthtech firms can incorporate expert advisory that not only incentivizes but also enforces their customers’ financial sound judgment. They achieve this by carefully assessing their portfolios and encouraging millennials to be price-conscious for their own financial benefit.
Previously, the investment advisory was only available to HNIs (High Net worth Individuals) or ultra-HNIs. However, the advent of technology has democratised advisory services and they are now accessible to individual investors, including millennials, in tier 2 and tier 3 cities.
Digitalisation has emerged as a major industry disruptor for wealth technology, and millennials are using it efficiently to cater to their investment needs. Wealthtech startups are making the process simple by designing their applications in such a manner that provides a complete digital experience for millennials along with a better interface, digital-first financial products, and low fees. In addition, these wealthtech firms are also providing robo-advisers that deliver asset allocation strategies with a focus on long-term goal-based wealth creation.
Wealthtech startups not only focus on the front end but also on the whole workflow with manual intervention. Millennials now trust them with their investments, accepting essential pieces of advice and gaining sufficient knowledge to become profitable investors. In addition, as millennials are always interested in new trends, these wealthtech startups are providing their industry insights with the latest financial products for investment. They are teaching them to read the market better, understand the variations, the significance of staying invested in the long term, and most importantly, how to stay profitable.