The response to our alternative investments event at Vantage Venues on Tuesday has been strong. In-person attendance is sold out, but registration remains open for the livestream. Participation will earn attendees up to four continuing education credits.
I met with Rob Grein, CEO of PMG Intelligence this week to talk about his keynote talk — Even Greater Expectations: Understanding Canadian market engagement with alternative investments.
PMG is a market research consultancy Grein launched in 1993. Since then, the firm has conducted about 1,000 studies and built research panels that include consumers as well as financial and insurance advisors.
His presentation will connect demographic trends with the emergence of new technology and growing consumer expectations of transparency and control over their financial future. Alternative investments have emerged from all of that to play an outsized role in Millennial and Gen Z portfolios.
A growing disconnect
It would be a mistake to view this affinity for alternatives with trust in the wealth management industry, Grein told me.
“There is this growing disconnect,” he said.
Young Canadians often feel excluded when advisory firms maintain investable-asset minimums they cannot meet. Many are also sophisticated enough to recognize that some products offered through bank and insurance branches may not represent the best available options.
“It makes them want to learn more,” Grein said. “They want to understand how these things work.”
Enter social media — now the preferred source of news and information for many younger investors. Much of what they find there is flawed, but it aligns with two needs they feel deeply: empowerment and optionality.
That is not a coincidence. The asset category currently being marketed most aggressively — online and offline — is alternative investments. Its closest competitor for mindshare is ETFs.
Mutual funds, segregated funds, bonds, GICs — those are for mom and dad’s portfolio.
Dan Richards, a marketing professor at the University of Toronto’s Rotman School of Management and a consultant to the financial services industry, made a similar point on the Canadian Advisor.cast in February.
“There’s a real risk that two, three, four years from now … if you’re in your 30s, early 40s — you’re a professional, you’re doing well — that you’ll be embarrassed to say that I’m working with one of the large banks,” he said. “That will be a sign of a lack of sophistication.”
This is about more than marketing. Alternative investments resonate with many younger adults because they align with how they see themselves. They do not live like older Canadians, they do not share the same expectations for the future and they do not want to invest the way previous generations did.
On top of all that, they fear missing out.
Whether or not that proves to be in their long-term interest remains to be seen. But advisors should recognize that clients drawn to alternative investments are often expressing a worldview as much as an investment preference.
