Millennials Want More from their Alternative Investment Experience

The alternative investments industry is changing as new investors make their way onto the scene. Millennials have already shown themselves to be responsible and demanding consumers who seek faster gratification, hate red tape, and want to be in control of everything they do. 

As the impact of Baby Boomers and Gen Xers starts to wane, Millennials will take the front seat, supporting innovation and driving a boom in the alternative investments industry. 

Why are Millennials seeking a new approach? Millennials understand that they have a long road in front of them. With this in mind, many Millennials are questioning the assumptions that previous generations have made. They're using broader investment strategies but adopting them carefully and deliberately. Along the way, they're pulling in insights gained from their own experiences in the areas outside of finance.

Let's look at some of the industry changes that are likely to come into play as these new consumers continue to make their mark on the market. 

Digital Experiences over In-Person Interactions 

It's not just a running joke that Millennials prefer screens to real, live people. As far back as 2017, Forbes reported that over 70% of Millennials preferred to interact with their bankers digitally. They also preferred to have a vast majority of their experiences — including the discovery of new products and brands — to take place digitally. 

Alternative investment managers often cite investor communications as the most time-consuming part of their businesses. Much of that strife arises from the fact that few tools exist to automate and streamline a truly digital communication experience, not to mention real-time performance reporting.

To accommodate the needs of Millennial investors, investment managers will have to up the ante and provide much more consistent, immediate communication - in multiple medias - something few companies are currently in a position to handle.  

As more Millennials engage with the alternative investments space, they will expect the same sense of connection, self-sufficiency, and faster gratification - as they can find in their other experiences. Investment solutions that lack a strong online and mobile presence and the ability to meet immediate demands will have harder time through this coming wave. 

Accountability and Transparency 

When modern consumers want to know whether a brand or individual is trustworthy, they often begin with a Google search or a quick review on social media. As a digital generation that grew up with social media, Millennials demand accountability and transparency in every interaction, including their investments.

Consistent with what they do in the workplace, as the new participants in the alternative investments industry, Millennials are mindful not only of their returns on investment, but also that the causes they care about. They look for the funds that support social equity, green tech, healthy lifestyles among others. In response to that many new and existing funds started to incorporate that mindset in their strategy - a trend that will only continue to grow. 

Interoperability 

Another exciting yet challenging part of changing the alternative investment industry is addressing the connectivity and interoperability of the investment experience. 

Millennials prefer their investments to be a holistic unified part of the experience with their other financial activities. They want to know that their investment strategy can align with the way that they handle other financial interactions such as budgeting and contributing to their savings.

In the modern era, personal accounting, banking, bill paying, traditional market investments, and retirement experiences are “connected” in many ways. However, alternative investments still have a long way to go to become an integral part of the overall financial package. With the entrance of Millennials to the investment market, that too will have to change.

Driving Innovation

Alternative investments are helping drive innovation around the world. Although these investments are new and exciting, the systems that support them will need to adapt and change for new generations to dive into these opportunities with enthusiasm.

In many ways, Millennials are more sophisticated than previous generations when it comes to diversifying their strategies and reducing their risks. Millennials are the force behind constant change and innovation, not the least in the area of alternative investments. 

The demand for faster gratification, connected digital experiences, transparency, accountability, and meaning will soon become the primary force pushing the alternative investments industry to new heights.

Alternative fund managers who are prepared to adapt to the new demands of the market are poised to lead the pack and set themselves apart, catching the interest of Millennial investors around the world. 

What's your take on the ongoing evolution for alternative investing? Let me know what you think in the comments.