Millennials’ Impact on Business

We want it all, and we want it now!

As part of the GEO NextGen Task Force Lucy Anderson has been analysing the changing trends in share plan participation, in relation to Millennials. Below she discusses her findings and why it is so important that the industry take note of these and react accordingly.

Is it just Millennials that are interested in speed and convenience?

A common theme associated with Millennials is the need for convenience and speed, however, is this confined to the younger generations or is it spilling over into society as a whole? What does this change in consumer attitude mean for employers and businesses?

It may well have been Millennials (born 1981–1996) that started the demand for convenience and speed, and honestly, you really can’t blame them. For the first time we had an entire generation with technology quite literally at their fingertips; at the push of a button entertainment was instant. Millennials grew up with games consoles and computers in their homes, with the internet instantly connecting them to people across the world. As technology advanced these sources of entertainment became mobile with speed and convenience becoming the norm; now expected and demanded.

Older generations may have rolled their eyes initially at the lack of patience and the seemingly demanding nature of the new ‘spoilt’ generation, but, fast forward 10/15 years and almost all generations have embraced the change in one way or another. Members of the ‘Greatest’ or ‘Silent’ generation (born before 1945) are online banking and video calling their grandchildren, the look of aggravation in a baby boomers (born 1946–1964) face when they are presented with a chip and pin machine rather than contactless payment can’t be ignored and heaven forbid a Gen X (born 1965–1980) should have to speak to a human when ordering their takeaway. No thanks, there is an app for that!

We all live in a society now where money can be moved in seconds; food, clothes, gifts can all be ordered online and received the same day without us ever speaking to a human or leaving the house. The latest step forward in this trend are the voice-activated devices, we now don’t even need to go online to have our questions answered, check the weather etc. or even have to move to put music on or change the TV channel.

In this modern world, most of us would agree that we are time poor, and advances in technology and logistics are helping everyone, no matter the generation; anything less than instant is no longer acceptable.

What can a company do to adapt to changing consumer needs?

None of this is new information, but it can be easy for businesses to fail to react to it. Sticking to what they know, blindly following current processes and procedures that ‘work’ can leave companies in the shadows of competitors reacting to changing demands.

In my role at Dowgate I speak with many companies within the share plans world, both issuers and providers. It’s always incredibly interesting to hear about the different services that are now being expected and
offered, and how this affects an institution’s reputation, client wins and even share plan participation.

During these conversations the phrase ‘investing in technology’ comes up time and time again. With retail banking becoming more convenient and speedier than it ever has been before, people/institutions across the board are expecting the same level of service from other sectors. You will be hard-pressed to find an institution or issuer that doesn’t want access to an online portal, and if there is a mobile app, even better!

The bottom line is that, even when it comes to KYC, the expectation these days is for slick, fast online application tools, checks and approvals. This is the same for client or employee communications, letters are too old fashioned and not interactive enough.

Using share plan participation as an example, employees are far more likely to respond to an invitation if they are contacted via email, text or app notification than if they were to receive a letter. Mainly because it is much more convenient, these forms of communications can be accessed anywhere, and an employee only needs to click on a link to proceed, rather than having to fill in forms, post letters and so on.

It’s important for institutions to assess their clients’ or participants’ needs and expectations, as well as reviewing, where possible, what your competitors are doing to maximise user experience. There will certainly be situations where time-saving could be more appealing than cost-saving when it comes to selecting a product.

Is there room for speed and convenience within share plan trading?

When it comes to share plan trading, there is of course room for speed and convenience. Account set-up, trade instructions and trade confirmations should be an easy process and any good stockbroker will have procedures in place that make it as straightforward and quick for their clients as possible.

However, when it comes to trading, expectation management becomes key. A large FTSE100 issuer with very liquid stock can usually expect that, at vesting, their employees’ sale instructions will be completed quickly. However, when it comes to a company with illiquid stock, or a very large order, well outside of the market norm, speed may well not be a participant’s friend.

If a broker were to simply enter these illiquid or large sale orders into the market, there is a distinct possibility that the issuer’s share price would be severely affected. Outside of that, if the trade needs to be undertaken quickly, some brokers will offer what is called a risk price. This is where they buy the shares at a price that reflects the risk that they may not be able to sell the shares in a specific time frame or price. Ultimately this means that the participants will not get the price that they were hoping for.

So, here is a situation whereby it is vital that all parties align to allow the required time for these types of instructions to be ‘worked’. Shares will be sold in smaller shapes until the order is complete, protecting the share price for the Company and ultimately providing their employees with the best possible outcome for their sale proceeds.

In Summary

Over the course of the last year the GEO Task Force has identified that whilst Millennials may have been the original driving force of instant demand culture, other generations are embracing this new way of life. Businesses need to be out ahead of client requirements, and those in the Share Plans world ensuring their participants are receiving the modern, fast and technologically advanced intuitive service they expect. Though as I mentioned, there may of course be some circumstances in which patience is still considered to be a virtue!

Lucy Anderson
Deputy Head of Equity Solutions at Dowgate Capital Limited

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