Do Wealth Apps Play a Big Role In Financial Literacy?
In the continuing battle for customer loyalty and investment dollars, it's clear that financial institutions must continue to provide quality content and services on their mobile apps. This was made abundantly clear by the 2022 JD Power U.S. Wealth Digital Experience Study, which found that half (50%) of Gen Y and Gen Z investors in the U.S. are turning to their primary investment firm's mobile app for educational content. This reflects a clear appetite for more financial education.
Evaluating Financial Wellness
Just 39% of pandemic-era investors (those who started investing in 2020) can be classified as financially healthy, compared with 72% among more tenured investors, according to our 2022 Self-Directed Investor Satisfaction Study. Brokerage firms need to make financial literacy a priority, as financially vulnerable clients have significantly lower satisfaction with their firms and are more likely to defect and less likely to recommend.
What Education Is Most Valuable for Clients?
JD Power research shows that firms can improve satisfaction and brand loyalty by doing a better job of delivering content, tools and services that teach clients to:
- Effectively manage investments in the context of their overall financial lives;
- Overcome the challenges of paying bills on time;
- Manage debt in a challenging economy;
- Develop a savings plan to cover six months or more of living expenses.
Using Wealth App to Educate Investors
“Wealth management firms that want to attract and retain younger investors need to focus on continuing to improve their apps,” said Michael Foy, senior director of wealth intelligence at JD Power. With increasing competition in the wealth management space from banks and fintechs, investors have increasingly high expectations about digital channels. In addition to their practical utility, these apps are also playing an important role in financial literacy.
Questions for wealth digital channel directors, strategy leaders and customer experience management teams:
- How can I develop scalable ways to meet the demand for advice and guidance investors with very different needs and levels of knowledge?
- What is the best way to balance human and digital interactions to best support clients?
- How can I improve brand loyalty through digital channels?
Wealth Digital Channel Development
Will investors continue to turn to firms for financial literacy? In the 2023 Self-Directed Investor Study, JD Power will explore investors' actual state of financial literacy and how well brands are doing to help educate and enable them to make better financial decisions. By doing so, we'll help ensure that these young investors stay loyal to the financial institutions that they trust for the long haul.
