The Perils of Ignoring Gen Y

The study asserts that the fund management industry’s short-term mindset is ruining its chances of capturing Gen Y clients. Most in the industry believe they don’t need to think beyond three years, the study says. “Remuneration is based on immediate results as opposed to long-term strategic positioning,” the study says. “This factor is driving the focus on boomers as they move beyond the workforce and into retirement. But the success of this industry in the past owes as much to the notion of demographic uplift as it does to the nimbleness of its players,” the study continues. “With the boomer bandwagon slowing down, it’s appropriate to consider establishing a dialogue with the next generation of wealth accumulators, Gen Y.”

The survey also reveals that while the industry agrees on what types of investment products Gen Y wants–equities and mutual funds–the industry is divided on how to approach these people. “This is an industry that knows its products far better than it knows its future customers, or how to engage them,” the study chides. Only 2% of survey respondents thought self-managed products would be attractive to Gen Y, the study says. However, the focus groups in all of the cities reinforced the point that Gen Yers “want to look at their portfolio every day.”

Besides being potentially good clients, Gen Yers also make good employees. “Gen Y has an even greater role to play in ensuring the long-term success of the fund management industry,” the study says. Yet the industry has a terrible track record in retaining these young people. “A quarter of businesses have over 30% churn in [Gen Y] staff. Some respondent firms have implemented dedicated Gen Y recruitment strategies. However, when results were cross-tabulated with staff turnover, it was found that recruitment and retention strategies had no discernible impact on the retention of Gen Y staff.”

What all respondents, regardless of age, agreed is that Gen Y needs education and information about financial planning. Respondents noted that the industry should consider lobbying governments to get programs about financial education into the schools and possibly the workplaces.