While you may not consider millennials your target customer, they are currently sitting on net wealth in excess of $1.4 trillion – and ING DIRECT research shows they have a growing appetite for sound financial advice.
Although The Truth of Gen X and Gen Y (2016) indicates 55% of this cohort has never used a financial adviser, almost half of Gen X and 40 per cent of Gen Y admit they need assistance managing their financial affairs. In addition, almost half of Gen Y expecting to receive an inheritance intends to seek advice soon, and 37% plan to seek advice in the future.
Considering Gen X and Gen Y are in line to receive the greatest inter-generational wealth transfer in history (it is estimated that $2.4 trillion will pass from the baby boomers to the next generations in the next three decades), this creates a huge opportunity for advisers to engage with the younger generation now and start delivering relevant solutions.
What do they want advice on?
Buying a home is still top of the agenda for both Gen X and Gen Y, with 36% saying it would trigger the need for financial advice. But day- to- day budgeting and saving are also on their radar. Both these behaviours impact their ability to purchase a home, so there is ample opportunity for advisers to educate customers throughout their financial lifecycle.
Superannuation, in particular, is where advisers could add value. A third of Gen Y say they aim to retire by 40. However, with the results indicating the majority has less than $100,000 in superannuation, there is an obvious disparity between expectation and reality. When it comes to the features Gen X and Gen Y are looking for in a super fund, they cited low fees and no fees as most important.
How do they want to receive financial advice?
Advisers still developing their digital proposition can take comfort in the fact that 80% of Gen X and Gen Y prefer face to face over robo-advice, at least for their initial meeting.
The research also highlighted the need for advisers to consider a range of approaches to financial planning at a price point which suits customers. A quarter of respondents have a ‘DIY’ approach to money management and over 43 per cent said they would like assistance, while 32 per cent said they prefer to delegate. Gen X expected advice to range from free to $250, while Gen Y would pay between $100 and $250, so incorporating a modular approach into your proposition could make your advice accessible to a wider audience.
How will they find you?
Customer advocacy is growing in importance, and for good reason. Customers are inclined to share their experiences – good or bad – with family and friends, and this can have an impact on your business.
According to The Truth about Gen X and Gen Y, 59.4% of Gen Y and 41.6% of Gen X would choose their adviser based on referrals from family or friends, so look after your existing clients and you’re already half way there to attracting new ones.
A strong and credible online presence is essential too. Around 35% of Gen X and 41% of Gen Y take to the web to search for adviser recommendations, so check your website and credentials are up to date, accurate and do justice to your proposition.
It’s encouraging to see Gen X and Gen Y are starting to explore the financial advice landscape. Now is the time for advisers to invest in tailoring their propositions to meet their needs and help them take control of their financial futures.
To get a copy of the full report contact your local ING DIRECT Representative here
