How to reach Gen Y

Financial planners looking to attract Generation Y clients should start with their parents, an expert on consumer, cultural and demographic trends has advised.

Presenting at the 2008 Securitor Convention in Auckland, New Zealand, KPMG partner Bernard Salt said the best way for planners to make themselves and their services known to Gen Y (broadly defined as those born between 1976 and 1991 and now aged in their 20s) is via their baby boomer parents, with whom they typically have a close relationship.

Salt said baby boomers (broadly defined as those born in the 15 years after World War II and now approaching retirement) make up the bulk of planners’ client bases, usually to the exclusion of emerging market segments such as Gen Y. But as baby boomers die off and leave their money to Gen Y, planners will need to be able to cater for a generation Salt variously described as experimental, tech-savvy, uncommitted and socially and environmentally-aware.

“I don’t think this industry has a real connection with Gen Y at the moment,” he said.

“But this needs to be a major focus over the next five years.”

Salt said succession and will and estate planning are particularly good ways of making the initial connection with Gen Y.

“You need to ask yourself how you can get your [baby boomer] clients to bring their Gen Y kids in. The parents will be on your side. I don’t think there’d be many who’d tell their children getting their finances sorted was a bad idea. The most important thing is that you let them [Gen Y] know you’re there.”

Once Gen Y clients are in the door, however, Salt said planners need to use the right language to talk through the solutions that accord with their values and lifestyles.

“[Planners] need to ask themselves which concepts are important to [Gen Y] and find solutions to match. Gen Y don’t believe in the hereafter, they believe in the here and now. They’ve grown up in an era of prosperity and have very different values and attitudes than previous generations — in general and toward investing.”

Solutions that help Gen Y to reduce debt, enter the housing market (perhaps using monetary gifts or loans from their parents), finance travel, education and their choice of lifestyle are all likely to appeal, he said.

Salt said that although baby boomers are likely to be planners’ biggest and most valuable clients for the next 20 or so years, they should start planning for Generations X and Y now.

“We’re at a crossroads right now in Australia. The real shift will begin early next decade, but you need to develop strategies to engage Generations X and Y now.”