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Retirement Planning > Retirement Investing

How to Attract and Serve the Underserved Gen Y Now: IA Retirement Plan Advisor for June 2010

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Advisors have always viewed the transfer of wealth–in particular high-net-worth wealth–as a legacy issue, and this is how they have approached their clients. But, says Liz Nickles, senior VP and chief marketing officer at New York-based FIT Consulting, that model has changed, and today, 80% of high-net-worth wealth is actually entrepreneurial rather than inherited, which means that advisors need to change their approach toward Generation Y, the beneficiaries and often the creators of this wealth.

Moreover, Gen Y’s view on wealth is also different from that of their parents and grandparents: “Their value proposition has shifted from the single bottom line of profit to the new bottom line of ‘planet, people, and profit,’” Nickles says. “Advisors who want to work with this segment of the population need to understand that.”

Nickles believes that the anticipated generational wealth transfer to Generation Y–which she defines as anyone born between 1976 and 2000–is upwards of $30 trillion, and will create one of the greatest market opportunities ever for individual advisors and institutions. Gen Y clients are also actively seeking financial advice, she says, yet advisors and institutions have not really caught on to this and the space remains grossly underserved. “Unless they get in front of this group now, they will lose them, putting the critical mass of wealth transfer assets at risk,” Nickles says.

Granted, less than 5% of investment advisors are under the age of 30 (and therefore on the same wave length as Gen Y in terms of understanding how they think and what they want), and both advisors and institutions have been focusing mainly on the Baby Boomer market. But according to Nickles, who has done extensive study on Gen Y and is the author of 11 books, including “The Change Agents,” about the socioeconomic impact of Gen Y, advisors just cannot afford to ignore this generation, and most advisors will be able to relate to this group if they understand a few basic facts about them in order to tailor their approach.

Planet, People, and Profit

First and foremost, advisors must understand the importance of the Three Ps–Planet, People, and Profit, Nickles says. Most members of Gen Y won’t take jobs simply because they want to make money, for example, and they would readily shun companies that are not socially or environmentally responsible for their actions, she says. The same applies for the investments a Gen Y person would want to make with her money, so “any advisory or investment program must take into account that the motivation is not money alone and must be constructed around the idea of social responsibility.”

For many advisors, this is a difficult concept to understand, but it is vital, Nickles says, and as important for advisors to understand as the role of technology in Gen Y members’ lives. Gen Y was born sitting at the computer, Nickles points out, and so anything that isn’t deliverable on an iPod won’t really fly.

“There’s been a digital as well as a mindset gap,” between Gen Y and most investment advisors and institutions, Nickles says. “Many young people go to the Web for their answers or interaction and financial firms have faced security issues and lack of relevant targeted tools when dealing with clients–particularly younger clients–over the Web.”

Get ‘Em While They’re Young

Finally, and perhaps most important, advisors and institutions must pay attention to the idea of branding. “This is a quick-shifting generation and if you haven’t connected with them on a brand level by the time they are 30, they will leave your brand,” Nickles says.

“Advisors tend to go with the parents/grandparents or family holistically rather than focusing on the members of the rising generation…. but even if it’s their parents’ brand or advisor, [Gen Y members] will get out of the relationship if a connection hasn’t been made; so advisory revenues are at risk.”

The best time to catch a Gen Yer is between the ages of 18 and 30, Nickles says, and advisors have to be very quick to make the connection and hold onto it. However, Nickles also believes that society at large should play a greater role in the financial education of its younger members. Since she says young people between the ages of 18 and 30, especially those graduating from college and entering the workforce for the first time, are looking for advisory services, Nickles urges colleges to make an effort at financial education. Institutions that operate on college campuses should be doing more than simply doling out credit cards to students, she argues.

In fact, Nickles believes that financial planning education should start as early as the first grade. It should, she says, go hand in hand with the civic, social, and ecological responsibility lessons that children receive.


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