For eBusiness & Channel Strategy Professionals

June 8, 2011

younger Generations Are Just The First Wave Of Mobile and Social Adopters
by bill doyle with Benjamin Ensor, Amelia Martland, and Beth Hoffman

Mobile And Social Technologies Come Late To Wealth Management

ExECUT I v E S U M MA Ry
To date, traditional investment and life insurance firms have been insulated from the disruptive forces of mobile and social technologies because their best clients are older. In countries around the world, younger generations lead in the use of the mobile Internet and social networks, while the generations with the most investments Boomers and Seniors lag. As older investors continue to adopt these new technologies and as younger investors accumulate more investable assets mobile and social strategies will become imperatives for investment firms and life insurers. Leading firms are already on the move, like New York Life Insurance in social and E-Trade in mobile. Smart eBusiness and channel strategists will decide now on their mobile and social strategies, even if the answer is to delay action for the time being. Generations are tHe best predictors of Mobile and social tecHnoloGy adoption Most traditional wealth management firms have not felt serious pressure to develop mobile and social technology solutions for clients because their best clients are the ones least likely to use the mobile Internet and social networks. Our research shows that:

The best wealth management clients are older. Baby Boomers hold the most investments.

The same principle is true for advisors and agents who sell investments: Older financial advisors and life insurance agents are typically the ones with the biggest books of business.
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Older adults are least likely to use social networks. Age is the best predictor of participation in

new technologies like social networks, where young adults lead in adoption. In fact, adoption follows age in lock-step: 87% of Gen Yers (ages 18 to 30) in the US have a profile on a social networking site like Facebook or LinkedIn, compared with three-quarters of Gen Xers (ages 31 to 44), two-thirds of Younger Boomers (ages 45 to 54), more than half of Older Boomers (ages 55 to 65), and less than half of Seniors (ages 66 and older) (see Figure 1).2 The pattern is just the same in other countries.

Older adults are least likely to connect to the Internet through mobile devices. Gen Yers and

Gen Xers outpace Boomers and Seniors in the adoption of the mobile Internet, as well. In fact, Gen Yers are fueling the recent jump in mobile Internet adoption: In the US, almost half of them are connecting to the Internet via mobile at least monthly, compared with just one in five Younger Boomers and one in 15 Seniors (see Figure 2-1).3 The same pattern applies for specific uses of the mobile Internet, such as checking financial accounts on a mobile device at least monthly: Gen Yers lead, with Gen Xers twice as likely as Younger Boomers to do it and Younger Boomers twice as likely as Older Boomers and Seniors (see Figure 2-2).
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Mobile And Social Technologies Come Late To Wealth Management

For eBusiness & Channel Strategy Professionals

younger Generations are Just the first Wave of adopters To date, traditional investment and life insurance firms that serve affluent and mass-affluent consumers have been largely insulated from the disruptive forces of mobile and social technologies because their best clients are older. But the free pass is going to expire. Why?

Younger generations are leading indicators for digital technologies. Our research shows that

with every significant digital technology trend, Gen Yers have led the adoption curve, with Gen Xers not far behind. Consider just one example. For a few years, Gen Yers have been spending more time online than with traditional TV. Gen Xers have now joined their ranks. Younger Boomers now spend an equal amount of time with both media.4 Over time, Older Boomers and even Seniors will follow suit.

Older generations become more active as their experience with a new channel increases. Our
research shows that as tenure with a digital channel increases, so, too, does a users willingness to conduct more complex interactions through that channel such as selling a security through a mobile phone.5 Older generations adopt mobile and social technologies later than younger generations, so their use of specialized features will lag, as well.

Younger generations wont abandon their channel preferences as they accumulate assets. For
Gen Yers and many Gen Xers, digital is the norm. If history is any guide, they will accumulate assets as they grow older and the digital behaviors that these consumers are developing now will stay with them as they age.

figure 1 younger Generations Lead In Adoption Of Social Networks

Percent who have an account with at least one social networking site: Gen Y (18-30) Gen X (31-44) Younger Boomers (45-54) Older Boomers (55-65) Seniors (66+) 47% Base: 26,749 US online adults Source: North American Technographics Online Benchmark Survey, Q2 2010 (US)
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87% 77% 66% 56%

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figure 2 As With Social, younger Generations Lead In Adoption Of The Mobile Internet
2-1 Younger generations are much more likely to use the mobile Internet Percent who access the Internet on a mobile device at least monthly: Gen Y (18-30) Gen X (31-44) Younger Boomers (45-54) Older Boomers (55-65) Seniors (66+) 7% 12% 21% 39% 45%

Base: 24,382 US online adults who own a mobile phone 2-2 Younger generations are much more likely to view accounts via mobile Percent who check nancial accounts on a mobile device at least monthly: Gen Y (18-30) Gen X (31-44) Younger Boomers (45-54) Older Boomers (55-65) Seniors (66+) 6% 3% 3% 16% 12%

Base: 24,382 US online adults who own a mobile phone Source: North American Technographics Online Benchmark Survey, Q2 2010 (US)
58728 Source: Forrester Research, Inc.

Mobile and social are becoMinG iMperatives for WealtH ManaGeMent firMs With so many prospects and clients embracing them, social technologies and the mobile Internet are bound to become essential to attracting and keeping wealth management clients. What makes their impact inevitable?

Social networks reach critical mass. Wealth management and life insurance remain person-toperson industries. Most of the selling and servicing gets done person-to-person via telephone, paper, and word of mouth. But these old-world networks have limited reach because they are all single-point to single-point connections. The Internet, on the other hand, enables robust

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person-to-person networks that are instantaneous, massively interconnected, and unparalleled in their reach. With 71% of US online adults already on social networks like Facebook, LinkedIn, and Twitter, many firms marketers, advisors, and agents see great opportunity to connect to prospects and clients.

The infrastructure for mobile Internet is finally in place. The mobile Internet has arrived,

thanks to a confluence of factors that did not exist before. Fast broadband mobile networks offer good coverage. Mobile handsets like the iPhone and Droid devices are finally delivering a competent Internet experience. And Internet brands such as Facebook, Google, Amazon.com, and Yahoo not to mention Apple and Microsoft have embraced the channel with offerings that are optimized for mobile.6 As a result, mobile Internet use is exploding: Mobile investing, for example, grew 38% in the past six months.7

Wealth Management firms face a big Hurdle on each front If deploying social and mobile technologies for prospects and clients were easy, many investment and life insurance eBusiness executives would have solutions in place already. But each imperative has one particularly high hurdle:

Compliance concerns have crippled most firms social efforts. Most wealth management firm
marketers and eBusiness executives, faced with little guidance from regulators and enormous pressure from compliance officers, have had a hard time getting any social projects underway.

Forresters take: Yes, wealth management firms face stringent rules on client communications. But the regulations arent insurmountable; they simply require policies and procedures. The US Financial Industry Regulatory Authority (FINRA) has provided plenty of common-sense guidance.8 Most notably, the rules for other media apply to social media: Social communications from employees of firms are subject to the same suitability and recommendations rules as they would be in any other medium.9 Likewise, firms are required to maintain records of their own and their employees social media statements, just as they would be in other channels like email.10

The highly fragmented mobile market is costly to support. The mobile Internet market lacks

the single, homogenous platform that eBusiness strategists are accustomed to with the Web.11 The mobile handset market is fragmented and will become even more diverse over the next few years. Operating systems from Apple, Google, and Microsoft will continue to battle it out with no clear winner in sight.12 Downloadable apps are device-specific, costly, and for the short term narrow in reach. Forresters take: Forrester recommends that channel managers at traditional wealth management firms focus their energy on high-quality, dedicated mobile websites, and at least one downloadable app.13 Building downloadable apps for as few as two different devices can increase a firms mobile costs by more than 30%.14

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leading firms are already taking action Despite the hurdles, some bold eBusiness and channel strategy executives at investment and insurance firms are already on the move, pioneering the use of:

Social. Many investment and life insurance firms have a corporate presence on Facebook and

Twitter. Fewer actively manage their presence like Fidelity, Pacific Investment Management Company (PIMCO), and the Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF) do. And very few firms allow their agents and advisors to have an official presence on a social network. But a few firms have jumped the compliance hurdle. New York Life permits agents to maintain Facebook profiles. Morgan Stanley Smith Barney allows financial advisors to have a profile on LinkedIn. Investor communities once the province of intrepid startups like thinkorswim, TradeKing, and Zecco Trading and some European online brokerages have spread to more established firms like Charles Schwab, Cortal Consors, E-Trade, and TD Ameritrade.15

Mobile. A growing number of wealth management organizations mostly direct brokerage

firms have committed real money and resources to client service through the mobile channel. E-Trade, which has been in the mobile space the longest, offers its investors access to account data, prices, charts, and transactions through a number of downloadable apps; Scottrade started with similar functionality on a dedicated mobile website in order to reach the broadest number of clients.16 Vanguard has a dedicated mobile site for advisors that provides immediate access to fund price and performance information. Generali France, a subsidiary of the Italian insurance group, offers agents and advisors mobile-app access to client information, clients holdings and past transactions, and graphic illustrations of market changes.17

R E C O M M E N d AT I O N S

social Media and Mobile sHould support your larGer business obJectives
It is time for investment and life insurance firms that serve wealthy consumers to reassess their customers appetite for mobile and social tools and decide on a strategy even if the answer is to delay action for now. Mobile and social are too important for companies to ignore. To guide the creation of strategy, Forrester recommends the POST method, a tried-and-true framework that applies to both social and mobile. The four steps to POST are:

people. Strategies must be based upon an analysis of the profile of a firms target customers.
How many use the mobile Internet and social networks today? Are there certain services that will appeal to your most profitable customer or prospect segments?

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objectives. you shouldnt have to invent new objectives for social media and mobile
initiatives; they should be similar to the objectives that your eBusiness team supports every day. Objectives should be specific enough that managers in charge of implementation have a clear guide for success and know early on when they must intervene to put a project back on track.

strategy. While objectives can be derived from existing eBusiness goals, mobile and social
will require different strategies because theyre different from the Web. Both make new connections possible, and both have the potential to change relationships with customers. By considering mobile and social audiences first and then choosing achievable objectives, firms can generate viable strategies for hitting their objectives.

technology. Smart firms let strategy lead their technology choices, not vice versa. Evaluate
your audiences, decide on objectives, design your strategies and timing and only then select a technology approach. Picking the technology first can easily result in a great solution that only a handful of people will be able to use.

suppleMental Material Methodology The North American Technographics Online Benchmark Survey, Q2 2010 (US) was an online survey, fielded in April 2010, of 26,913 US online users ages 18 to 88. For results based on a randomly chosen sample of this size (N = 26,913), there is 95% confidence that the results have a statistical precision of plus or minus 1.4% of what they would be if the entire population of US online individuals ages 18 and older had been surveyed. Forrester weighted the data by age, gender, income, broadband adoption, and region to demographically represent the adult US online population. The survey sample size, when weighted, was 26,749. (Note: Weighted sample sizes can be different from the actual number of respondents to account for individuals generally underrepresented in online panels.) Please note that this was an online survey. Respondents who participate in online surveys have in general more experience with the Internet and feel more comfortable transacting online. The data is weighted to be representative for the total online population on the weighting targets mentioned, but this sample bias may produce results that differ from Forresters offline benchmark survey. The sample was drawn from members of MarketTools online panel, and respondents were motivated by receiving points that could be redeemed for a reward. The sample provided by MarketTools is not a random sample. While individuals have been randomly sampled from MarketTools panel for this particular survey, they have previously chosen to take part in the MarketTools online panel.

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for technographics clients Forresters North American Technographics Online Benchmark Survey, Q2 2010 (US) includes many additional parameters by which you can analyze the data contained in this report. Please contact your data advisor at consumerdataadvisor@forrester.com if you would like to see additional data cuts. If you do not currently subscribe to Forresters Consumer Technographics services, please contact your account manager at data@forrester.com. endnotes
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Ownership of many investment products grows steadily through the younger generations and peaks with Younger and Older Boomers. See the August 10, 2006, Capturing Boomer Retirement Dollars report. Next to online retail, social networking site usage has seen the biggest jump in adoption since 2007. Social networking sites are driving the growth of social technology usage. Although only slightly more than onethird of all US online adults visit social networking sites regularly, the future looms large: Almost two-thirds of Gen Yers report that they update or maintain a social networking site profile at least monthly. See the December 13, 2010, Understanding The Changing Needs Of The US Online Consumer, 2010 report. One-quarter of owners of mobile-Internet-capable phones now log onto the mobile Internet. More than one-third of these online mobile consumers are connecting at least monthly. Forresters trend research shows that this big jump in mobile Internet use is primarily fueled by Gen Yers. See the December 13, 2010, Understanding The Changing Needs Of The US Online Consumer, 2010 report. When we add total hours spent on the Internet for personal purposes to total hours spent on the Internet for work purposes, time spent online has surpassed TV time for US adults. TV time is time spent watching TV on a television, not online. Gen Yers average 17.3 hours online and 10.8 hours watching TV per week. At the other end of the scale, Seniors average 6.1 hours online and 14.8 hours watching TV per week. See the September 21, 2010, The State Of Consumers And Technology: Benchmark 2010, US report. Forresters research shows that willingness to conduct transactions such as online trading increases with the online tenure of consumers. For example, just 2% of households that have been online for less than a year buy or sell securities online. Three times as many households that have been online for four to five years trade online. Five times as many households that have been online for seven to eight years trade online. And eight times as many households that have been online for more than eight years trade securities online. See the February 1, 2007, US Online Trading Forecast, 2006 To 2011 report. The mobile data ecosystem has seen many false dawns in the past. This time is different, as the platforms and enablers are widely and cheaply available. Fast 3G networks are available, large touchscreen handsets are becoming common, and US Internet brands are taking mobile innovation seriously. Mobile operators now offer consumers all of the familiar Internet services in a pocket-sized format, and consumers are embracing mobile data and the mobile Internet. See the July 21, 2009, Why Mobiles Time Has Come report.

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Today, 11% of US online adults with investment accounts say they are mobile investors which Forrester defines as investors who have checked investment account or portfolio information, traded securities, or transferred investment funds via a mobile device in the past three months. This is up from six months ago: In Q2 2010, we found that 8% were mobile investors. See the February 16, 2011, The State Of Mobile Investing report. If youre developing social initiatives for financial services, you should read the FINRA regulatory notice. Source: Regulatory Notice 10-06: Guidance on Blogs and Social Networking Web Sites, FINRA (http:// www.finra.org/industry/regulation/notices/2010/p120760). Social communications from employees of investment and securities life firms are subject to SEC Rule 2310 on suitability and recommendations. See the September 7, 2010, Social Media Marketing For Financial Services report. There are a number of companies that can help archive your companys social media posts, including Actiance, Hearsay Social, and Socialware. All desktops and laptops are very similar, even Macs and PCs: similar screen sizes, computing power, and interaction methods (keyboard and mouse), as well as the same few brands of browser software. In the operating system battle among Android, Apple, and Windows Mobile, many observers feel that Google has already won. But too many firms have too much to lose if Google wins and dominates the market. Forrester believes that the more successful Android becomes, the more competition it will face. See the January 27, 2011, Smartphone Trends 2011 report. The success of the iPhone, iPod touch, and iPad, along with the Apple App Store, has led many executives to believe that a mobile app is a must-have. But mobile apps have sharp downsides for investment firms. They are device-specific, costly, and for the short term narrow in reach. No single device dominates the smartphone market. Building multiple downloadable apps can multiply a firms mobile costs. Add to that the fact that these apps must be maintained across a rapidly evolving OS release cycle. But the biggest challenge lies in integrating mobile apps with firms core applications environment in a secure and stable manner. Forrester believes the best mobile strategy will have three components: 1) Invest in high-quality dedicated mobile websites; 2) choose a single platform on which to pilot a downloadable app; and 3) use the downloadable app as an opportunity to test more advanced features and functionality. See the February 16, 2011, The State Of Mobile Investing report. Mobile apps are device-specific, costly, and for the short term narrow in reach. No single device dominates the smartphone market. And the apps must be maintained across a rapidly evolving OS release cycle. But the biggest challenge lies in integrating mobile apps with firms core applications environment in a secure and stable manner. This can be done by exposing data via secure XML pages, but this is not an advisable long-term strategy. True secure mobile app development will require a significant investment for most firms. The mobile Web is less complex. See the February 16, 2011, The State Of Mobile Investing report.

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At TradeKings Trader Network, clients and registered users can connect with one another to share trading tips and strategies. TradeKing clients who start sharing their trading performance with other uses increase their trading by about 70% in the first three months. See the November 30, 2009, Investment Firms Cant Ignore Social Technologies report. A number of investment firms have developed mobile apps, and many offer dedicated mobile Web sites. Consumer adoption is ticking up: Today, 11% of investors are mobile investors. Although downloadable apps command a lot of attention today, Forrester believes that the mobile Web will remain a critical delivery method for the foreseeable future. See the February 16, 2011, The State Of Mobile Investing report. Generali Frances iNomino app for the iPhone offers financial advisors mobile access to client information, details of clients holdings and past transactions, and graphic illustrations of market changes. Nine months after launch, one in 10 advisors served by Generali France the French subsidiary of the Italian insurance group use iNomino at least weekly. Forrester believes Generali France is a pioneer of a trend that will see more financial providers using the mobile channel to support agents and advisors. See the May 24, 2011, Case Study: Generali France Supports Financial Advisors With Innovative Mobile B2B App report.

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Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 27 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com. 2011 Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, TechRankings, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective owners. Reproduction or sharing of this content in any form without prior written permission is strictly prohibited. To purchase reprints of this document, please email clientsupport@forrester.com. For additional reproduction and usage information, see Forresters Citation Policy located at www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. 58728