We don’t kill industries
But millennials are creating change through new mindset, lifestyle and purchasing patterns
A quick Google search shows the myriad brands and products – bar soap, the oil industry, and casual dining chains, to name a few – that millennials are “killing” because of our lifestyle and choices.
Rather than killing a product, many industries are reaching their next phase of maturity, and in doing so, leaders must put thought into how the key decision-making criteria of their next generation of customers differs from previous expectations for how a product or service was purchased.
Here are two major industries that we’re not killing, but are changing, as a result of our new mindsets, lifestyles and purchasing habits:
While the ability to purchase property was once seen as the pinnacle of success, millennials have a different perception of the benefits and drawbacks to home ownership. As a result, the share of millennials renting has risen to 65 percent in 2016, up from 57 percent in 2006.
While some may say that we’re “throwing away our money” by renting, I counter that, first, we don’t perceive housing to be the safe, or sound, investment that it is said to be. We grew up as housing prices crashed, and the home purchased for $30,000 that sold for $350,000 isn’t an opportunity that we’re likely to have.
Next, ownership is complex and costly, comprised of paying the mortgage, insurance, all utility bills, renovation, maintenance and more. Renting is simple. A monthly payment is my only responsibility.
Finally, we aren’t ready to embrace the commitment that ownership requires. I’m willing to trade my lack of ownership for the mental comfort of not having six figures of mortgage debt hanging over me. Most estimates show that the typical breakeven point on a purchase is about seven years; I have no idea what I’ll be doing in seven years.
We understand that renting doesn’t build equity, but we frame the decision as opportunity rather than opportunity cost. While I’m still young and flexible, I want to be able to pursue my next stage of life based on the merit of the opportunity instead of anchoring myself to one city or property through ownership.
We have unprecedented access to the stock market and financial advice compared to prior generations. We can invest in the S&P 500 at a cost of $3 per $1,000 invested or hand over responsibility to a fintech startup that will manage our money for $25 per $1,000, well below the $100-plus that a traditional advisor charges. This means that simply taking our money and charging a fee for that privilege won’t be enough to win millennial business.
Growing up in the era of technology has given us a level of trust in computers that doesn’t exist in past generations. My dad, a boomer, has a deep distrust of any algorithm that would manage his money. I don’t. In fact, I think that technology can manage my money better and cheaper than most financial advisors.
In that light, the advisor should now become an educator. Teach us the sound financial habits that many of us lack. The advisor can drive more value to the client by teaching them how to save and live a financially healthy lifestyle rather than trying to compete with sophisticated trading algorithms that can process information faster than any human.
Competing for wallet share across generations requires significant thought and a multi-faceted approach to business development. The financial advisor who wants to manage money for myself and my dad must sell him on the personal touch of someone managing his money, while emphasizing to me the technology they use to manage their portfolio and the educational resources to empower my financial life.
These two industries are just an example of how the millennial mindset is driving change. For every person who writes that we’re killing the industry, there’s an entrepreneur who sees change as opportunity. They’re doing the research to find what we want, not what the prior generation deemed acceptable.
With knowledge at our fingertips, we’ll keep looking until we find the right product fit, and companies in these industries and others can no longer hide behind the way business has traditionally been done, or else they risk losing their next generation of customers.
Jordan Bean, an associate with Stax Inc. in Boston, can be reached at firstname.lastname@example.org.