Failtech: Financial startups are ignoring the wealthiest Americans because of their age

Silicon Valley has seen an explosion of financial technology companies over the last few years, offering everything from credit score checks, to financial theft services, to password encryption for bank accounts. But they’re failing to target older Americans — the very demographic with the most money. Unfortunately, it’s old-fashioned Silicon Valley ageism that is getting in the way.

How do we know older Americans aren’t being reached?

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Morgan Stanley (where I work) recently released the results of its latest Investor Pulse Poll (IPP), a survey of people with a minimum of $100,000 in investible assets. The poll showed that identity theft (72%) outranked terrorism (65%) as the number one concern among respondents.

Yet, here’s the kicker: when IPP respondents were asked if they have safeguard services to help protect their financial information, few said that they do. Only 28% of respondents regularly access their credit score, and only 24% have personal identity theft monitoring services. An even fewer 11% have online password managers to help safeguard their data.

It’s clear that this demographic is in need of help, so why has Silicon Valley’s vast number of financial technology (fintech) companies failed to reach it?  Taking a deeper look at the IPP numbers offers a major clue. Though IPP respondents ranged in age from 25 to 75 years old, the majority of the respondents were between the ages of 50 and 75.

This older demographic dominating the poll shouldn’t be surprising, as the U.S. Census Bureau and other outlets have shown throughout the years that 55 to 75 year olds have the highest net worth of any age group in the United States. Nor should it be a surprise that this group has trouble with financial technology, as it would be surprising to find a young programmer or engineer in the Valley who hasn’t helped their parents once or twice with a computer issue.

Perhaps fintech companies in the Valley are reluctant to reach out to this older demographic with their services since older generations tend to be more conservative. But credit score technology, identity theft monitoring services, and online password managers are the exact tools this group’s members need in order to monitor their finances. Additionally, a good 35% of people 65 and over now use some form of social media, making them ripe for identity theft and financial fraud.  If the Valley’s fintech companies aren’t properly marketing or creating products for this demographic, something is really off.

Ageism fits.

Though there is not much available data on the average age of fintech employees specifically, a quick look at 20 of the biggest fintech companies in the Valley finds that the average age of their CEOs is 39.1 years.

Like most tech companies, fintech operations must also depend on programmers, developers, and marketers. The average age of a developer in the tech industry is 31 years old. A quick look at 21 of the largest tech companies in Silicon Valley finds that the average age of the rest of their employees is 31.3.

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When employees are around the same people, all in the same profession, all in the same age group, their ideas tend to synchronize. Products get made for their universes. It’s only natural for many to forget about the ideas of people outside their environment.

Maybe fintech companies do want to reach the 55-plus crowd but just haven’t had the time to do a focus group of them. The Valley is, after all, about getting products to market quickly, ahead of competitors. Fintech companies are pretty new, so maybe the majority of their employees’ time has been spent just getting the business up and running; the products that come from that rush have only targeted a younger demographic so far.

Or, it could be actual bias. It doesn’t take more than a quick Google search of “age in Silicon Valley” to see hundreds of articles about the Valley’s older employees’ experiences with ageism.  Let’s also not forget that there have been prominent tech executives in the past who have famously said people over the age of 30 are slower and less smart than people under 30.

Whatever the excuse, fintech companies, and all of Silicon Valley, should really take note: It’s bad business to ignore the 55-plus demographic, not only because they’re the richest Americans, but also because by 2017 they will be almost half of the U.S. adult population and will control a full 70% of the disposable income.

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George Noceti is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Silicon Valley. He previously served as president and CEO of Gavelnet.com, a pioneering online auction service that he founded. Prior to that, he held a senior executive position with Butterfield & Butterfield, the fine art auctioneer and appraisal firm. During his tenure, he led the company’s successful entry into online auctions and was instrumental in eBay’s 1999 acquisition of Butterfield & Butterfield. He has also held various senior marketing, business development, and strategic planning positions with Match.com, Electric Classifieds, Inc., Animatek International, Inc., and Hemming Morse Consulting Practice.