“Hey Alexa… will Amazon’s move into banking impact financial advisers?”
“Well Steve, I’m not sure about that…. but if I was to make an educated guess… I’d have to say – Probably”
It was only a few months ago that Amazon launched its Australian marketplace, and the 6 o’clock news bulletins were filled with experts claiming that it was the beginning of the end for traditional retail stores Down Under.
While this story has many more chapters left in it, the average Aussie economist would probably tell you that at the very least, the Amazon marketplace will have a significant impact on the retail sector.
However, it is Amazon’s latest adventure into the financial services industry that has really got my attention, and it is a move that I think could have as big an impact on the financial advice market – both here and in the US – as the Amazon marketplace is likely to have on the retail market.
I’m talking about suggestions coming out of the US that Amazon is looking at partnering with some of Wall Street’s biggest banks to deliver a “checking-account-like” product for Amazon customers.
These rumblings might have something to do with a LendEDU survey of 1,000 Amazon shoppers that was released last month. The Amazon customers (who by the way, have an average age of 37) were asked a range of questions relating to Amazon related banking products. Some of the key findings included:
- 45 per cent of Amazon customers would use Amazon as their primary bank account;
- 49 per cent would use Amazon for savings accounts;
- 50 per cent would use Amazon for personal loans; and
- 30 per cent would even use them for a mortgage.
Some of you might be thinking: “Well this is just related to banking and lending, which isn’t really financial advice now is it – so why do we need to worry about this?”
Because while these statistics alone may not give you cause for concern – especially if your model focuses on older Aussies needing strategic advice, active investment management or asset allocation – if you combine these findings with other research into the attitudes of “Gen Y” when it comes to their financial lives, it starts to paint a slightly more concerning picture for any adviser planning on still having a relevant practice in 2020 and beyond (which is in only 20 months’ time).
Specifically, if you cross reference the Amazon/LendEDU research with KPMG’s Banking on the future (3rd edition) report and ING Direct’s The truth about GenX and Gen Y then the bigger issues start to come into focus.
KPMG referenced research by Kronus and Galaxy (conducted in Jan 2016) that suggests Gen Y will make up 50 per cent of the Australian workforce by 2021 and 75 per cent by 2025.
KPMG’s own research found that 75 per cent of Gen Y’s list “savings accounts” as their “primary investment tool” (as opposed to only 8 per cent for managed funds).
And KPMG had a much higher level for the “I would consider using a tech company for banking” – coming in at a staggering 84 per cent.
Finally, add in the ING Direct research – which showed that GenY’s top ‘expected benefit’ of working with an adviser was “saving money”.
Suddenly, the real issue is now crystal clear.
In as little as two years’ time, Generation Y will represent a huge part of the ‘advisable’ population, and unless we all start to offer an advice ‘solution’ that is built for them – helps them with ‘what they want’ help with, offered in the way they want to ‘buy it’ and delivered in a way they want to ‘consume it’ – then maybe the Amazon’s of the world will.
We could face the very real possibility that an entire generation of Australians will see financial advisers as irrelevant to them. They will still want and need financial advice, they just won’t get it from us.
Fortunately, I know that there is a small but growing bunch of vocal and passionate financial advisers (they know who they are) that won’t let this happen.
They’re the ones asking all the “why can’t we?” type questions at licensee and industry professional development days and conferences.
They’re the ones who don’t just sit back and wait for the advice models to evolve over time. They’re fighting to shape it into what they need to stay relevant today, and in the future, even if they don’t really know what that looks like yet.
So maybe we need to ask Alexa a different question:
“Hey Alexa… what can I take from Amazon’s move into the world of financial advisers, and use it to my advantage today?”
Steve Crawford is the GenX client adviser at Experience Wealth, and adviser coach at theXYacademy.
Meanwhile, FASEA will require us to study a whole bunch of repetitive, outdated subjects at great time and expense, when instead we could be *upskilling* ourselves to PROPERLY service Gen Y/Millenials under the new conditions that will exist 5-10 years from now.
I can only shake my head at the lack of imagination amongst our industry’s current leadership.