Financial planning is no longer just the domain of the baby boomers. According to research by KPMG, wealth building and financial control is increasingly on the agenda for Gen Y.
While on the surface that may sound like good news for those working in the financial advice space, there’s a catch: the younger generation is adopting a very different approach to financial planning then their parents and grandparents.
Only 5 per cent of young professionals currently use financial planners and 85 per cent say they don’t need financial advice at all (KPMG 2015). That’s not to say they’re disinterested; instead they’re leveraging digital and other resources and doing most of their financial planning themselves.
So what does this mean for the financial planning industry? The fact is that catering to a younger clientele will become more of a reality as Baby Boomers start to move past the point of retirement planning.
If financial planners want to create a sustainable business in the longer term, they will have to evolve their value proposition in the following ways to attract and retain a younger demographic:
1. Transition from adviser to ‘coach’
Despite Gen Y eschewing financial planning in its current format, KPMG found that the majority (65 per cent) value financial coaching.
Online tools and calculators now do the ‘hard yards’ early on in the financial planning process, so for planners, the ability to coach and clarify–rather than ‘tell’ – will be a valuable asset. Gen Y are looking less for a ‘do it for me’ and more for a ‘do it with me’ approach – they want confirmation that their interpretation of the data, and subsequent decision making, is correct.
2. Hire from outside the industry
The new generation of adviser requires different attributes than their predecessors to create affinity with a younger client base. So when hiring into your practice, keep an open mind and consider training talented individuals from other industry backgrounds, such as professional services.
Rather than focusing solely on technical skills, consider the importance of relationship building in today’s increasingly automated environment, and bring on board those who excel in this area.
No one understands Gen Y like Gen Y, so diversify your practice to encompass a mix of younger planners to create synergy with your target audience.
3. Get to grips with digital
If you want to resonate with digital natives, then you need to speak to them in their ‘language.’ Gen Y manage their lives online, so ensure you have a digital presence.
You may like to look into apps to make their financial management process easier, consider Skype or Facetime video calls, or add value as a credible information source through content creation on YouTube.
There’s no doubt that the financial planning industry is undergoing significant transformation. But for financial planners who are prepared for to align themselves with the 18-30 year old demographic, there’s huge scope to deliver value in a way that resonates.
