Generation Y goes by many names: Gen-Y, millennials, or the echo of the baby boom. They’re a generation you want to get to know because they’re the future of your retirement business. Gen-Y are the children of baby boomers and make up 27% of Canada’s population, while their parents account for 29%.1 They’re a generation nearly as large as the baby boom but due to age and circumstance, many are just beginning their adult lives and haven’t had the opportunity to make as significant an impact on Canada’s economy as their parents…yet.
Invest in the relationship, see benefits for years
The retirement market in the financial services industry is currently focused on helping boomers transition into retirement and as an advisor you can make a great impact to your business today with the same focus. But don’t miss out on the opportunity to activate a long-term client base in Gen-Y. Over the next years, it is projected that Canadians could inherit nearly $895 billion in intergenerational wealth transfers from their elders.2 While a majority of that transfer is expected to go to boomers, at the end of the 10-year period Gen-Y will be ranging from 50-30 years old and may have received a piece of that wealth transfer from their parents or grandparents. Financial advice on how to best manage those inheritances can help them achieve their financial goals.
As Gen-Y starts on their journey to build financial assets, it’s important to build a solid relationship with them early in the process. Research conducted by DSA Media and Brown Communications Group3 found that once a millennial has chosen a brand, there is 70% likelihood they will be a repeat customer and value authenticity, integrity and execution on deliverables above all. The same research identified that 44% of Canadian millennials say they write about positive experiences with products online, and in turn prefer to seek recommendations from their social networks when making judgments and decisions about services. Gen-Y referrals could lead to a positive impact on your top line now, and their continued business can help your business in the future.
Entrepreneurial spirit
Gen-Y is the most educated generation in history,4 yet they are experiencing many barriers to finding gainful employment.5 Not all of Gen-Y is content waiting for opportunities to come their way. They’re adapting to their economic circumstances and are embracing entrepreneurship at twice the rate of the Canadian average.6 These young, forward thinking individuals are taking on a risky venture but with careful planning, guidance, and perseverance your clients could see big rewards, and you can help them see the larger picture for their future financial needs.
As an advisor, you can help young entrepreneurs get started by identifying savings vehicles to help build the capital needed to fund their dreams. Once their businesses are off the ground, you can outline the need to fund retirement and protection plans and provide solutions for benefits and incentives that they can offer to their employees.
Similar goals, different circumstances
Although Gen-Y is approaching their careers differently than their parents, they do share similar goals such as home ownership, marriage, children, and early retirement.7 They might not be ready to make these financial commitments today, but you can give advice to help them make choices that can benefit their future.
Gen-Y clients aiming to retire early and/or purchase a home can be well suited to using a Registered Retirement Savings Plan (RRSP) as a savings vehicle. To help millennial clients who are looking to purchase their first home, you may already be suggesting that they use an RRSP to help save for the cost of purchasing a home so they can take advantage of the Canada Revenue Agency’s Home Buyers Plan.8 In the process they will also be saving towards their future retirement income. It’s an especially enticing savings strategy to suggest to your Gen-Y clients who have employer matching benefit programs in place. Although helping a Gen-Y client save for a home may not be a big sale, after helping with the purchase of their home you’ll build trust and position yourself to provide solutions such as mortgage protection as well as investment and further protection advice as they grow their families and their assets.
What does it all boil down to?
Gen-Y may be experiencing a slow start in the financial game but this doesn’t mean that you should write them off as potential clients. Gen-Y is a large generation in waiting and will make financial gains as they progress through their adult lives and their predecessors move into retirement. Make an investment in building their trust and loyalty today, so that both your business and your clients can thrive in the future.
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1 Statistics Canada, 2013
2 Household Balance Sheet Report, Investor Economics, 2013
3 JOLT – Tapping into the Minds of Millennials, Brown Communications Group, 2012
4 Friese, Lauren, Jowett, Cassandra (2013). The six ways Generation Y will transform the workplace, The Globe and Mail
5 (2013) Ontario’s youth unemployment among worst in Canada, CBC News
6 Banks, Brian, (2013) How Millennials are set to take over the Canadian Economy, The Financial Post
7 (2012) Generation Y in Canada: National Poll of Millennials Reveals a Troubled Generation (Infographic), The Huffington Post Canada
8 Canada Revenue Agency, 2014