Tim Hewson, National Partnerships Manager, Residential Mortgages and Wealth
Spendthrift Gen Y ‘live for the now’, are ‘know it alls’ and are lost without access to digital technology – or at least that’s what generational stereotypes would lead us to believe.
However, recent research by ING DIRECT suggests the reality may be somewhat different. According to The Truth about Gen X and Gen Y (2016), millennials are challenging the stereotypes around financial planning behaviours– opening up plenty of opportunities for advisers to connect with this next generation of customer:
1. They admit they could do with some help
Far from being ‘know it alls’, Gen Y concede they may need help in achieving their financial goals. While the majority realise the importance of professional advice, the extent to which they require assistance varies: 32% prefer to delegate rather than go it alone, 25% like a ‘DIY’ approach and 43% have an appetite for a solution that is somewhere in between.
2. Face to face trumps robo-advice most of the time
Despite living in the digital age, a clear majority (80%) of Gen Y say they would prefer to engage with their planner face to face – at least during the initial meeting. But while the research found no clear demand for robo-advice per se, online information is viewed as a useful way to obtain supplementary advice – and there’s an expectation that it should be free of charge.
3. They listen to their parents
Gen Y is more inclined to seek advice if their own parents have used a financial planner in the past. In fact, when it comes to choosing a financial adviser, family referrals (44%) strongly outweigh anonymous recommendations on social media (14%).
4. Gen Y are more super-savvy than their Gen X predecessors…
Not only are Gen Y more confident (34%) in their super compared to their Gen X counterparts (17%), they are also more ambitious with their retirement goals: one in three (33%) Millennials plan to retire before 40. This aspirational cohort also expects their retirement living costs will exceed the current ASFA Retirement Standard benchmark for a comfortable retirement by $260 a week.
5.They are more willing to seek and pay for their advice
Almost half of Gen Y who expect to receive an inheritance plan to seek advice in the immediate future, and they’re prepared to pay for it too – between $100 and $250 for an annual face- to- face meeting, followed by a tailored financial plan. In comparison, Gen X expects advice to range from free to $250 and are more likely to see a adviser on an ad-hoc basis.
The opportunity
While 42% of Millennials have never used a financial planner, The Truth about Gen X and Gen Y indicates a clear appetite for professional advice. In particular, ambitious retirement plans highlight a need for education around the real cost of retirement.
The research shows that Gen Y is crying out for a modular approach to financial planning, which allows them to pick and choose what they need, at a price point that suits them and in whichever way they want to receive it.
Ultimately, millennials’ willingness to build a relationship over a long -term basis provides a welcome opportunity for advisers to educate this cohort and deliver long-term value for money.
For more information, please visit: http://adviser.ingdirect.com.au/
