They'd Rather Spend than Save, But Gen Y Is Your Future
They've been called egotistic, impatient and self-entitled — and they have a notoriously bad reputation when it comes to saving — but advisors want them.
While Generation Y controls a mere fraction of the country's total net worth, its members are widely considered the future of financial planning. As a result, advisors are paying particular attention these young adults.
"They may not have much now, but you're going to see a transfer of wealth," says Jim Dario, managing director of product management at TD Ameritrade Institutional. "It's going to move from $2 trillion today to $28 trillion in eight years."
To capture some of that growing wealth, advisors from around the country are beginning to reshape their practices to accommodate and attract this rising generation.
Gen Y clients may be the next frontier for financial planning, but their low investable assets and risky retention rate aren't all advisors should be thinking about. A few insights by Teck Lim on How to retain the next generation.
"When working with Gen Y clients specifically, you need to approach it from a financial standpoint and a behavioral one," says Pirnack. "The financials give the numbers and tell the story of where a client needs to be, but you also need to build behaviors that are to their financial advantage."
DEVELOPING SAVING HABITS
"If you have someone who loves drinking coffee every day, you don't want to cut that out," says Pirnack. "Try to figure out which areas they are spending on that they enjoy the least, and cut from there — so that they can save for their daily lifestyle and the future."
SELECTIVITY
"We may make certain changes to serve our clientele well, but we're not going to change our business based on where the money is," Joyce says. "We're making sure that we stick with our knitting, be good at what we do and segment the clients that we want within Gen Y."
"The more things you can get done for clients, the more valuable you become to them," he says. "They're more demanding upfront because they have more information upfront, and so they expect a lot of value out of their time and money."
"They are used to working in fun, interactive and transparent environments — why should our process be any different?" asks Moss. "They're much more engaged and emotionally connected than before, and [the client relationship] becomes more than management of money."
CHALLENGES & PAYOFFS
"If they cannot find an advisor that truly connects with them, they'll most likely drift from firm to firm, and that is not a long-term solution," says Moss. "They need people and firms that are going to be around for as long as they are and truly understand them and work the way they do."
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One response to "They'd Rather Spend than Save, But Gen Y Is Your Future"
Gaurav Karnik says:
Thanks for the crisp & refreshing content!