10 FORUM MAY 2014
RELATIONSHIP MANAGEMENT
Prefers
a casual
demeanor
Will Google you
Doesn't like risk
Not interested
in retirement
[
]
MAY 2014 FORUM 11
hen the industry discusses intergen-erational planning, the emphasis is mostly on boomers and their aging parents. There’s little focus on the boomers’ kids who make up Gen Y (also called “Millennials”) — those born between 1980 and 1995. Part of that comes down to basic eco-nomics: Gen Y don’t yet have the assets of their parents and grandparents. But consider that their introduction to professional advice is likely to come from their parents — the bulk of your clients. And if you don’t have a relation-ship with the kids, they will go with another advisor, some-one who’s in tune with their needs, and take their parents’ inherited assets with them.
Gen Y clients form 25 per cent of Sara Zollo’s business. She says they come to her out of dissatisfaction with their parents’ advisor. “What I hear is these advisors give gener-ic recommendations,” says Zollo, a financial planner with Sun Life Financial in Toronto. “Things like, ‘We’re going to put you in this mutual fund.’ Meanwhile the Gen Y client
walks away not understanding why and how it fits with their short-term goals.”
Want some insight into Gen Y and how they differ from previous generations? Read on and learn what strategies work best.
GEN Y DOES:
lots of research and digging for facts.
YOUR STRATEGY:
Build an online presence.
Let’s say a Gen Y consumer is interested in professional advice, and receives your name from a friend or family member. If you think that person will simply call you up, think again. Your name is just the starting point of their research. “In the past, people would trust what the advi-sor says,” notes Syed Raza, marketing manager with LSM Insurance. “This generation already knows what they are looking for because they’ve been able to do a search online.”
Gen Y will Google you, see if you have a website, blog, Twitter feed and/or LinkedIn page. They want to know about everything from your investment philosophy to
W
Generation
The term “Generation Y” conjures up all sorts of images.
But if words like “entitled” and “underemployed” come
to mind, it’s time to change your viewpoint, reports
Deanne Gage. In fact, consider expanding it to include
the word opportunity
P H O T O : D A N IE L E H R E N W O R T H
Talkin’ ‘Bout My
(416) 925-5997 T S
Turn your clients’ retirement
needs into retirement solutions.
C d T
m T
how you run your business to your extracurricular activities. Simply showing up on the online equivalent of the Yellow Pages won’t cut it.
“If we can’t get a feel for who you are and what you’re all about, we’re not going to contact you,” says Taylor Hewson, a certified financial planner with Regina-based TCM Financial Studio. Hewson, 27, runs a practice with his father, John, and brother, Connor. “We’re pretty weary of [advisors] who don’t have a web-site, considering how easy it is to set one up.”
As a Gen Y advisor, Shannon Lee Simmons is the first to admit social media can be a pain. It does take a lot of effort. On her web-site she hosts videos and features an in-depth blog. She is essen-tially giving away content for free. But she also sees the payoff. “If [prospective clients] can’t get a handle on what your ideas are, they will skip over you,” says Simmons, a certified financial planner and chartered investment manager with Toronto-based Simmons Financial Planning, a fee-for-service firm.
Simmons likens her approach to a financial version of the web-site WebMD. Gen Y can self-diagnose their financial issues, but the fact is they’re still going to seek out an expert opinion from some-one who will get to know their unique situation. “People pay for the relationship, not the advice,” she says. “That’s why it’s not scary to give the advice away.”
Your website doesn’t have to be fancy but should have the basics such as your contact information and your personal story. On
RELATIONSHIP MANAGEMENT
Twitter it’s not about how many followers you have. Here, says Simmons, Gen Y is looking for credibility. What are you tweeting about? Do people seem interested in what you have to say? Do you interact with your followers? Do you seem to have genuine Twitter discussions with people about financial services and other pursuits? Simmons, for example, used Twitter to partially promote her Barter Babes project, where she provided free financial advice for one year to women in exchange for everything from a monthly freshly baked pie to an airline ticket. “A lot of people can’t afford a fee-for-service advisor, so my whole point was to make advice acces-sible and fun,” she explains. She met 300 women, mainly Millennials, through the experience, and it helped springboard her business.
Since starting three years ago 650 people have come through Simmons’s office doors for fee-only advice, but she has about 270 regular clients.
If you don’t have a
relation-ship with your clients’ kids,
they will go with another
advisor, someone who’s in
tune with their needs, taking
their parents’ inherited assets
with them.
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If the prospect of building an online presence is something that makes you feel uncomfortable, Hewson recommends advisors offer seminars tailored to Gen Y issues. Start by inviting your clients’ children. Resist the urge to “sell.” Instead, consider a softer approach where you talk about the ins and outs of a tax-free savings account for 20 minutes, then provide an open forum. “Our generation likes to ask questions and [get direct feedback to their questions],” he says. “[The goal is for] you to become the natural place for them to go when they need more [specific] advice pertaining to their situation.”
If a prospective Gen Y client meets with you, he or she won’t come empty-handed. The person will have done their homework, and will have a lot of questions. They won’t likely say, “We don’t know much about investments and financial planning, so what can you tell us?” However, Hewson doesn’t consider that to be a bad thing. “[Their questions] drive the conversation and make our time together more valuable,” he says.
Some of the information they find won’t be accurate, which is why Sara Zollo sees it as her job to filter through the garbage. Some Gen Y prospects, for instance, wrongly believe that advertised rates of return don’t account for MERs and other fees, she says.
GEN Y DOES NOT:
care about retirement … yet.
YOUR STRATEGY:
Short-term goals and solutions.
Remember the bank billboard that showed a 23-year-old woman investing for 10 consecutive years, and how she accumulated more money for retirement than a 32-year-old man who started
invest-ing the same amount for 30 years? That kind of marketinvest-ing won’t work with this generation. “We understand that we will retire some day, but it’s not at the forefront,” explains Hewson. “We’re not nec-essarily scrimping and saving for this magical age of 55 or 60. Focusing too much on retirement is a definite turnoff.”
Stefania Di Verdi concurs. The 30-year-old online managing editor for MoneySense often writes and edits stories about the Gen Y consumer. “No one I know is really talking about investing,” she says. “It’s more about how they can save enough for a house while paying down debt, or how they can join finances with their boyfriend or girlfriend. It’s mainly about getting established, get-ting on the right path. Invesget-ting [comes] later.”
Okay, it’s “elephant in the room” time. How do you make money if the Millennials aren’t ready to buy investments or insurance? Charge for your advice. Di Verdi believes many are willing to pay. She often hears from young investors wanting to pay flat fees for financial plans that they can update later if they need to. The flat-fee model is actually the basis of Simmons’s practice. She offers an array of packages where prices are all-in, and not based on an hourly rate. One package is cash-flow planning, which covers every-thing from how much house you can afford to paying down debt and saving/planning for children.
That isn’t to say you should avoid talking about the future; just de-emphasize it. Hewson focuses on the term financial
inde-pendence. “Saying to a Gen Y client ‘If you save this amount,
you’ll be able to retire by age 55’ isn’t useful to them because they have many other things to consider over the next 20 to 30 years of their working life.”
14 FORUM MAY 2014
Zollo sees it as a matter of instilling good habits, and what this client needs to do on a monthly basis in order to achieve his or her short-term goals.
GEN Y DOES NOT:
like to take on much risk in their
investments.
YOUR STRATEGY:
Educate and use your perspective.
According to research from Accenture, 43 per cent of Gen Y investors describe themselves as conservative investors. Their port-folios may look similar to those of seniors, with a focus on
preserv-ing capital.
This is not news to Hewson, who often hears Gen Y clients say they’ll invest but don’t want to lose any money. While markets may currently be on the upswing, the downturn of 2008 is still a fresh memory for this generation, Zollo says. Many may have seen their boomer parents lose a substantial chunk of their retirement sav-ings during this period.
When Zollo sees GIC-type portfolios and asks them about it, the answer tends to be a variation of “I didn’t know what to choose — I picked this one because I was told it wasn’t too risky.”
“They are open once I show them they are being too conserva-tive long term,” says Zollo. “But without any guidance they tend to default to a more conservative approach.”
Hewson will often show index charts to display markets over the last 60 years, but says veteran advisors have the edge over younger advisors in this area. “The biggest value an older advisor can bring is perspective,” he says. “They’ve seen people go through the various stages and come out to the other side debt-free and able to retire, and they can speak to that.”
GEN Y DOES NOT:
like stuffy attire.
YOUR STRATEGY:
Be yourself. Loosen up.
Gen Y clients could care less about pinstriped suits and what Hewson calls the “ultra-professional” look. His firm is set up like an art studio — open concept, to make financial advice less intim-idating. Simmons’s Toronto office is on trendy Queen Street instead of in the financial district. Zollo, who works in a more traditional office tower, tries to make her appearance more casual by wearing funky jewelry.
GEN Y DOES:
value someone who “hears” their needs.
YOUR STRATEGY:
Avoid being what Simmons calls the
three Ps: patronizing, preachy and parental.
Gen Y’s first encounter with a financial advisor is usually through their parents. One of Hewson’s clients mentioned that his parents’ advisor was great — for his parents. Zollo hears similar comments. Unfortunately, these advisors put little to no effort into setting their clients’ kids on the right path. “Some older advisors just give gener-ic recommendations like ‘we’ll just put you into this mutual fund,’” Zollo explains, noting that Gen Y values more personal input into the planning process. “They don’t want to just be told ‘do this’ or ‘do that,’ but want to see solutions simplified and tailored to their specific situation.”
Gen Y may not bring much to the table asset-wise, but their concerns also don’t eat up much of your time. They usually have one or two goals like paying down debt or saving up for a house,” says Hewson. “Take an hour or two to go over their situation and give them advice, and they’ll walk out feeling great. It might just be the act of them taking responsibility for their financial life. That really does go a long way when, down the road, they do have money to invest.”
Reaching out to the next generation can be as simple as listen-ing to the parents’ stories about their kids. When Stefania Di Verdi got married last year, for instance, her parents’ advisor sent her a small gift. That was her first contact with the advisor. “My dad never said ‘come and meet her,’ and she never reached out to me before,” Di Verdi says. “But it was a very nice gesture. I know where she’s going with it, but that’s fine.”
Di Verdi noted the advisor never followed up with her after that. “I’m curious to see if she will.”
DEANNE GAGE is a freelance writer in Toronto and can be reached at [email protected]. If you would like a PDF of this article, please email [email protected].
