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INVESTMENT BANKING | Staff Reporter, Singapore

More millennials join investment rush to cash in on COVID-19 volatility

The segment constitutes 35% of all new investment accounts in APAC from March-April.

Wealth managers face heightened opportunities to reach new investors through the rise of the millennial segment, which have been rushing into financial markets to capitalise on the steep increase in volatility amidst COVID-19 disruptions, a report by GlobalData revealed.

Data derived from GlobalData’s 2020 Banking and Payments Survey and Life and Pension Survey shows that recent investment account openings have been dominated by the Millennial segment.

Between mid-March and mid-April, more than half of new accounts in investment platforms were opened by millennials, data from GlobalData’s 2020 banking and payments survey showed.

However, the figure is slightly lower considering accounts in APAC, with the segment constituting only 35% of all accounts in the region.

“Gen Zers and the vast majority of Millennials would have been too young to be financially impacted by the effect of the 2008-09 financial crisis on investment portfolios. This means that having never experienced a prolonged downturn, younger consumers are more willing to take risk and capitalize on a market rebound,” notes Heike van den Hoevel, senior wealth management analyst, GlobalData.

The recent spike in account opening represents a significant opportunity, van den Hoevel adds, noting that managers should reach to the millennial investors segment to create goodwill.

However, he warned that considering their age, their investment activities havethe potential to result in significant losses. This may result in many millennials terminating their accounts, effectively ending what could have turned into an advice relationship further down the line.

New investor support, such as introductory training and education sessions with a focus on risk and return, will be critical to ensure the longevity of a new relationship, according to the report.

“Our data also shows that younger consumer segments are notably more likely to pay increased attention towards financial literature from their financial services provider after a downturn. This, combined with increased account openings, suggests that now is a critical time when increased customer engagement promises to be most effective in connecting with that desired millennial segment,” adds van den Hoevel.

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