Financial planners should consider ways to attract generation Y clients as they could potentially be one of the most lucrative customer segments in future years, according to industry experts.
McCrindle Research director Mark McCrindle said gen Y’s are a key target market and that it was important for planners to take note of their rise.
“We are talking about 4.65 million people born from 1980 through to 1994 in Australia, more than one-fifth of the total population is gen Y,” he said.
“But not only is their size large but their life stage is spot on. They are currently 18 per cent of the workforce and within a decade they will be 35 per cent of the workforce, they are moving from the smallest generation of the workforce to the largest within 10 years.
“In other words they are right now moving into those wealth accumulation years. They are going to be working later in life than any previous generation, so they will actually accumulate more money in their lifetime than any other generation.”
Association of Financial Advisers chief executive Richard Klipin said advisers should look at gen Y’s as an investment.
“In the main they have disposable income but they don’t have a huge asset base,” he said.
“These clients will grow with a practice rather than come into a practice with large assets to invest or large insurance needs. So the engagement strategy is around just making sure the business is aligned to their life stage and engaging them with issues of interest in channels that they are going to access.
“That often means the internet. It now often is going to include a social media presence such as Facebook and LinkedIn and we are starting to see advisers starting to create YouTube channels with YouTube information sessions which are small and easy to access as part of their marketing strategy.”
Wealth Enhancers co-founder and financial adviser Sarah Riegelhuth said targeting gen Y clients could help practices secure future profitability.
“They may not be as profitable as some of our pre-retiree clients but they will be in the future when their needs change and become more complicated,” she said.
“But they still are profitable, we charge them a fee for the advice that we’re providing them and they pay that fee.
“Also by targeting gen Y clients you are future proofing your business, you are getting that growth proposition in there.”
Hunter Financial Planning director and senior adviser Phil Smith said gen Y clients were becoming an increasingly important part of the business.
“There is a perception out there that gen Y aren’t profitable but at the end of the day business owners need to price their advice around the level of complexity and make it value for money otherwise no-one including gen Y will continue to deal with them,” he said.
