Young investors shun Bursa Malaysia


  • Markets
  • Thursday, 15 Aug 2019

“Malaysians have about 43% of gross financial assets in bank deposits and we believe there is a lack of choice in the market, ” Wong(pic) said during the ‘New Age Investments’ Conference hosted by Malayan Banking Bhd. Wong claims that the percentage of young investors was disclosed by Malaysian regulators.

KUALA LUMPUR: Only a small percentage of young retail investors under the age of 35 are investing in the local stock market despite technological innovations that enable them to do so.

According to StashAway Malaysia country manager Wong Kai Wen, young investors are a “severely” under-served category due to expensive existing financial products and higher minimum investments required to invest in the market.

“Only less than 5% of young retail investors under the age of 35 are investing in Bursa Malaysia.

“Traditionally, we have seen that Malaysians hold too much cash and are under-invested compared to developed markets.

“Malaysians have about 43% of gross financial assets in bank deposits and we believe there is a lack of choice in the market, ” Wong said during the ‘New Age Investments’ Conference hosted by Malayan Banking Bhd. Wong claims that the percentage of young investors was disclosed by Malaysian regulators.

In comparison with developed markets such as the United States, Malaysia lacks a variety of choices that developed markets offer such as a plethora of exchange-traded funds (ETFs), digital brokers as well as digital fund managers.

In the past, younger people were generally ignored by the financial services industry. The thinking back then was that unless a person had a lot of money, they wouldn’t have access to good financial advice and tools.

To encourage millennials to invest, wealth-management firms have been coming up with new products that are right up the millennials’ alley.

These include smartphone apps, chatbots powered by artificial intelligence, ‘clean and green’ funds, robot-driven advisers and simple bite-sized articles on handling investments.

The traction is definitely there, although the initial investments made by younger people are small compared with older investors.

But wealth managers simply cannot afford to ignore millennials anymore. This digitally savvy group, who are now in their 20s to mid-30s, would be the largest adult segment in their world in a few years to come.

In its wealth-management survey for millennials, consulting firm Deloitte said millennials would be the largest client group and were, therefore, driving many wealth managers to assess their business models, as well as the way they interact with clients.

Two-thirds of the global millennial adult population is from Asia itself.

“Until 2020, the aggregated net worth of global millennials is predicted to more than double from 2015, with estimates ranging between US$19 trillion and US$24 trillion, ” said Deloitte.

Studies show that millennials want their financial decisions to align with their ethical values. In fact, compared with other generations, millennials are twice as likely to invest in sustainable financial products.

However, Deloitte pointed out that millennials tend to mistrust social security systems for their own retirement needs, which gives rise to a new line of product offerings.

At the same time, millennials still value traditional media and face-to-face meetings for advice. About 80% would even appreciate personal meetings with their investment adviser.

“This clearly highlights that the majority of millennials regard technology as an additional way to communicate and invest, but not as a substitute for personal interactions provided by a wealth manager, ” said Deloitte.

But wealth managers simply cannot afford to ignore millennials anymore. This digitally savvy group, who are now in their 20s to mid-30s, would be the largest adult segment in their world in a few years to come.

In its wealth-management survey for millennials, consulting firm Deloitte said millennials would be the largest client group and were, therefore, driving many wealth managers to assess their business models, as well as the way they interact with clients.

Two-thirds of the global millennial adult population are from Asia itself.

“Until 2020, the aggregated net worth of global millennials is predicted to more than double from 2015, with estimates ranging between US$19 trillion and US$24 trillion, ” said Deloitte.

Studies show that millennials want their financial decisions to align with their ethical values. In fact, compared with other generations, millennials are twice as likely to invest in sustainable financial products.

However, Deloitte pointed out that millennials tend to mistrust social security systems for their own retirement needs, which gives rise to a new line of product offerings.

At the same time, millennials still value traditional media and face-to-face meetings for advice. About 80% would even appreciate personal meetings with their investment adviser.

“This clearly highlights that the majority of millennials regard technology as an additional way to communicate and invest, but not as a substitute for personal interactions provided by a wealth manager, ” said Deloitte.

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