Investing has never been so accessible. Anyone with a smartphone and an online bank account can buy shares on the S&P 500 in an instant. At the recent Investment Horizons Conference hosted by the Investment Association, speakers saw this both as an obstacle and an opportunity to reach a younger audience that has radically different preferences than previous generations.
More tech and AI investment advice
A major theme throughout the day was the implications of AI for the asset management industry. The message was clear: productivity needs to increase and AI has to help do it. To use AI successfully, speakers mentioned the need for solid data, a history of innovation and, vitally, highly skilled talent.
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“Making sure that we listen to the younger cohorts of our clients and also our people because they use technology in a totally different way from the way we do. They literally live with technology. So we have to make sure that technology is somehow more fragmented in response to almost single individual needs,” M&G Investments Equities, Multi-Asset and Sustainability chief investment officer Fabiana Fedeli said.
For Edward Park, chief asset management officer at Evelyn Partners, the goal is to adjust to young people’s expectations. He wants to achieve “high levels of personalisation at scale” with the help of technology.
“I think the demographic expectations are shifting in terms of what the digital front end looks like to a retail client, particularly a younger demographic, and therefore investment in portal,” he added.
AI could also help “democratise advice”, according to LGIM’s head of multi-asset partnership strategies, Nicola Morgan-Brownsell. She explained that having access to financial advice in an “easily accessible, interactive” way has huge potential for society.
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By GlobalDataSpeakers throughout the day seemed to agree on one thing: for the industry to stay relevant it has to transform, and technology will be the foundation of that transformation.
Crypto attracts
Crypto investments are looked upon warily by many, but they are consistently popular with younger cohorts. Gerald Rhen, BNY Investment’s head of investment management EMEA, cannot see them being treated as a normal asset class any time soon by regulators.
“It’s hard to see how the regulators can square that to allow it to become part of a regulated retail product in the short term, because it doesn’t have any of those […] fundamentals that they tend to look at [when] they regulate products for approval,” he explained.
However, when talking to young people about financial inclusion, “it is hard to not talk about crypto”, Robert Gardner, Rebalance Earth’s CEO responded. Gardner is also a founder and trustee of the financial literacy charity RedSTART.
He highlighted how unfavourable socioeconomic conditions explain young people’s attraction to crypto investments that have the potential for “asymmetric payoffs”.
“For a young person who is struggling with cost of living [crypto] is the only asymmetric investment that, and I am not saying it is right or wrong, but it has an asymmetric payoff that you probably don’t get investing in any other asset class,” he explained.
Given the lack of favourable economic conditions for this cohort, unlike the cheap housing market baby boomers experienced a few decades ago, it makes sense that the younger generation would be attracted to an investment that is framed by some as having huge payoffs, Gardner added.
