You’ll need to do some rethinking of how you do business and communicate, writes Gayle Bryant.
Targeting Gen Y clients makes a lot of sense for financial advisers.
Born between 1980 and 2000, they represent the biggest generation in history, and according to Matthew Hawkins, Genxt national chair of the Association of Financial Advisers, it’s a generation very focused on their personal finances.
“Gen Y are professionals who are proactively looking to gain a better understanding of strategies to help with managing cash flow, paying down debts and setting themselves up to successfully grow wealth,” he says.
“The emergence of Gen Y clients has come through the significant wealth transfer from Baby Boomers to the next generation. Advisers have known that inter-generation advice was important to the sustainability of their business, but unfortunately some have left this re-focus too late.”
Changing business models is key to attracting this group, says Clayton Daniel, co-founder of networking and education group for younger advisers, XY Adviser.
“Gen Y clients typically have high incomes and low asset bases,” he says. “If your business model is simply to gain as many funds under management as possible, then a lot of money is walking out the door. Gen Y clients are more than willing to pay for advice if you offer them a complete solution to what they need.”
Daniel says Gen Y probably have the same level of financial literacy as any other age group, but understanding money takes a long time and most people can’t be bothered to learn. “I wouldn’t say they are cynical – probably the opposite. Younger clients have a long time frame and are often happy to invest aggressively,” he says.
New ways to engage
Hawkins believes some advisers are starting to adapt their business practises. “Historically, business models were based around providing superannuation, investment and insurance advice,” he says. “But the trend is now to use cash flow, budgeting and goals-based investing to form the basis of advice rather than product-based solutions.”
He says Gen Y and younger consumers may mistrust traditional financial planners with old business models and are seeking alternatives.
“They want to feel they have a financial life coach; someone who can help navigate this stage of their life rather than a more conventional planner.”
Advisers also need to find new ways to engage with this segment, which is typically tech savvy, time poor and requires a level of immediacy around their advice needs.
“This means the use of Facebook, LinkedIn, Twitter, but increasingly YouTube videos,” Hawkins says. “Many advisers are using Skype and GoToMeeting as a way to engage outside the office so they are becoming like a virtual financial adviser to Gen Y.”
Daniel agrees attracting Gen Y clients is best achieved online, as that is where they are used to purchasing.
“An advertisement through social media sends potential clients to a landing page where they are offered free information,” he says. “If the free information is helpful, they build up trust and are willing to turn to the person who provided them with the insights.”
Rising Tide director Matt Hale is putting this strategy into practice. He says Gen Y clients are out there; it’s just a question of whether you can connect with them.
“We’ve found that the topical issues that come out of having conversations with Gen Y clients are well received by others in that space,” he says. “The content we write on our blog may not be traditional financial advice but it appeals to Gen Y. For example, we recently wrote about travel cards. Travel cards have nothing to do with financial advice but it was content that our Gen Y clients – many who are about to take off overseas travelling – could relate to.”
Hale says while you don’t need to be the same age as Gen Y to attract them as clients, you do need to put yourself in their shoes,” he says. “You should also get good counsel to find out what Gen Y is thinking about so you can discuss issues that concern them.”
Hawkins also doesn’t believe you need to be a Gen Y adviser to have Gen Y clients: “Older advisers need to broaden their markets, be aware of the significant amount of wealth transfer that is occurring and educate themselves on the best way to communicate and engage with Gen Y.”
“Providing inter-generational advice to their Baby Boomer clients is a great way to remain engaged with the family group and by adapting their business models successfully to attract and retain this growing client demographic.”
Hale adds the requirements of Gen Y are no different to what 30-year-olds wanted 20 years ago.
“They are still career building, having families and everything in between,” he says. “The only difference is that it is easier [for them] to access information. Our role is to help Gen Y decipher that information rather than just telling them what to do.”