One of the constants in our business is our insistence on listening, I mean really listening, to people in all walks of life. Particularly when they’re talking about money. When people talk money they’re almost always talking about something else, too – something very close to the skin, like family, love, identity. Aspects of life shape every decision you make, from what you snack on after school to whether you ever retire.
I’m a firm believer that getting the broadest possible variety of perspectives and viewpoints, enriches everything, including your business offering. This goes double for financial institutions.
This week, I spoke with Jessica Rudman, Maru/Matchbox’s Research Director for Financial Services, about her generation’s experience with personal finance, which is a sharp departure from tradition; if she feels this way, chances are very good more people feel this way. Judging from the nearly viral interest in self-directed personal finance, many millions more feel this way. Excerpts follow:
Tricia Juhn: I heard you accomplished a personal milestone this year. Can you talk a little about that?
Jessica Rudman: For the first time this year, I was able to organize my finances and make a budget, something I had been promising myself I would do for the past five years. After I realized that I didn’t have the skills – that I had never learned this — I did some research, found a financial literacy class to take, and decided to join.
And I’m loving it! The class is full of other Millennials taking the step towards understanding their finances. It’s teaching us how to have control and freedom. After a few classes full of discussions, I realized that most Millennials want to be in control of their money, we just didn’t know where to start.
Juhn: What, specifically, did you want help with?
Rudman: We want to understand money, how to make a household budget, how to save (in general), how to save for retirement (what’s a 401K?), how to buy a house, and for those a little savvier, how to invest. There lies a great opportunity for financial institutions to own this space.
Juhn: Why do you want help with this? Or, put another way, what do you get out of it?
Rudman: We want to be in control and find freedom. You can group us into 3 categories:
First, you have the financially savvy who know what they are doing, but they want more. They want more knowledge about how to make their money work for them.
Then you have those who see budgeting and taking control of their money as financial chains. They feel it’s restrictive, but they know they need to start paying attention to their finances.
And lastly there are those who are just scared to look at their finances, so they ignore them. It’s the elephant in the room no one wants to talk about. BUT we know we need to. In all these cases, we just don’t know where to get started.
Juhn: What’s the best way to get this information out to you and people like you?
Rudman: We Millennials want options from very personalized (think personal money counselor) to general tips and tricks (articles easily available). Anything from financial counseling sessions to general courses to financial apps.
Millennials are getting older and finances are becoming more important. We know this road will lead to financial freedom and retirement savings.
I think a few financial institutions are on their way to discovering the power of leading consumers to a greater financial understanding. Capital One Cafes are popping up all over metropolitan areas – they offer a free space to work along with fun and informative community activities.
Juhn: Last question: So you would trust a bank or another financial institution to teach you about basic finances? No issues there for you?
I would trust a bank or financial institution to teach me about my finances, because if they care enough to offer something that goes above and beyond what other banks, offer it means they care about me and my finances.
Juhn: Thank you, Jessica. Best of luck.
Jessica and her cohort are telling us at least two things, both of which are radical departures from the past:
1. They’re open to financial institutions (FI’s) to coaching them with their finances.
Prior generations went to professionals for advice on a specific product – an insurance policy, a mutual fund. Up until very recently, the realm of the basic budgeting and money management was the private purview of the individual consumer.
But with the rise of mass affluence, consumers need help earlier than they used to: Instead of saying, “OK, I can save $50 a month, where should I put it?” they’re saying, “I feel like I could be saving more, but I don’t know. My bank should help me figure that out.”
That’s the new part, and it means (say it with me now): the path to choosing an FI doesn’t start with the choice of product, it usually starts with an interior monologue that needs to become part of the FI’s customer strategy – or journey map, if you’re into that sort of thing.
2. There’s an implicit trust that the FI’s interest coincides with the consumers’.
To many, this is so mind-boggling to be inconceivable. Traditionally, consumers assumed that the bank wanted to capture as much of households your assets as possible, which isn’t always the same as acting in the consumers’ interest. It’s notable that even having grown up in the shadow of 2008, some portion of Millennials still trust banks implicitly to help them understand, not just take custody of, their finances (How did that happen? Does anybody know?).
This represents an unprecedented opportunity for FIs to have a role in developing deep, personal relationships with clients in a way that we haven’t seen since the era of the small local bank.
Again, we’re not saying these are universally true, only that it’s true for enough people that FIs have an opportunity to be more nuanced, more human, in their approach customer strategy. Money and people are incredibly complex. Let’s see it, and treat it, for the incredibly complicated story that it really is.
People’s financial journeys often begin with an internal monologue (“Where is all my money going? I should have more saved than this,”) which then looks for an opportunity to become an explicit conversation(s) (“Who can I talk to about this?,”). This in turn becomes a series of physical actions (search this, compare that, download this, talk to him/her/them) resulting in a choice of product(s) (“OK, I think this is the best savings account/insurance policy/mutual fund for me”) and partnerships (“Wow, these guys have just consistently been here for me when I’ve needed help.”).
What does your financial journey look like? What are the things you grapple with? And who do you want to talk to about it? We want to hear from you.
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