Online Brokers Coax a Tough Crowd: Millennials

Online brokerages are trying to convince a generation of young investors, scared off by their parents' harrowing experiences with stocks, that it's safe for them to play.

Several leading online brokerages, including TD Ameritrade and Fidelity Investments, are testing new technologies and tools designed in part to appeal to members of the Millennial generation, people born from 1981 on up until 2000.

It's the industry's latest push to appeal to a generation of investors who have witnessed several historic stock market crashes and an implosion of one of the biggest market bubbles in history in 2000.

The efforts are critical for the industry as the Baby Boomers, the generation who grew up enamored of stocks, age and shift toward more fixed-income securities.

"If you look at who we're targeting today vs. in 10 years, it's a very different investor," says Nicole Sherrod, managing director of the trader group at TD Ameritrade.

Courting this demographic is proving to be a unique challenge. TD Ameritrade recently found that just 11% of Millennials viewed the stock market as the best way to save for retirement, even though financial planners see stocks as one of the best asset classes for long-term wealth generation. Four in 10 Millennials thought a savings account was the top choice for retirement planning.

But at the same time, members of this generation are extraordinarily confident of their financial skills. More than 80% said they've become more knowledgeable about finances in the aftermath of the financial crisis, vs. the 66% of older generations who felt that way, according to a survey by Fidelity. Meanwhile, 55% of Millennials said they were more confident about investing than they were before the financial crisis.

To reach this important demographic, brokers are trying a number of things:

--Building new social networking tools. TD Ameritrade this year unveiled a Facebook app called LikeFolio....

Comments are closed.