DENVER – Up next for Gen Y and MIllennials? Wealth management.
While most of the attention around both demographic groups continues to focus on introductory financial products, Gen Y has entered its prime earning years, as has the front edge of the younger Millennials.
During the America’s Credit Union Conference (ACUC) and World Credit Union Conference here, CUNA Mutual Group’s Gary Weuve said there are unique needs of these new generations of investors, who hold almost $30 trillion, the largest amount of wealth transfer since the Baby Boomers.
The challenge for financial advisors, especially in the credit union industry, said Weuve, vice president of The Center for Advisor Excellence, CUNA Brokerage Services, Inc., is there is a gap in investment education among this generation.
'Educational Work' Needed
“Without a direct relationship with someone they know, like the family financial advisor, these younger customers are unlikely to appreciate what the financial advisor has done to build and retain the parents’ investments,” he said. “There is educational work needed for these new investors to illustrate the value of a financial advisor given Gen Y’s first investment experience was marked by two significant market crashes and market volatility.”
Weuve pointed to recent CUNA research that found 74% of non-members between 18-24 have some or no knowledge of credit unions. However, according to CUNA Mutual Group, those in Gen Y who are members do trust credit unions as a source of financial advice.
Weuve said that approximately 30% of these younger members trust credit unions with their educational savings needs because it is a familiar relationship. But when it comes to financial investment advice, this same group significantly relies on friends and family for guidance, by almost 45% versus 16% with credit unions.
“There is a great opportunity to provide a holistic financial service to this segment, more so than with Gen X and Baby Boomers, ranging from insurance, to savings, to investing,” suggested Weuve.
There Is Some Good News
The good news, according to CUNA Mutual, is there is motivation to invest with this large emerging investor segment. The company’s “Be in the Moments” research found 60% plan to open a retirement savings account before age 26, 52% plan to open a college savings account for their children, and 41% plan to purchase a life insurance policy.
Credit unions can start breaking through the awareness barrier to get more Gen Y into the credit unions through targeted marketing materials, social media, and educational sessions that relate to their world.
“Gen X and Y are more inclined to work with you if you connect with them on their terms and show them the long-term benefits and financial stability that you can provide,” said Weuve. “Transparency is huge for this group.”
Other Advice Shared
Other tips offered by Weuve on engaging Gen X and Millennials:
engage this up-and-coming investor segment:
- As a group, Gen Y has a herd mentality, yet values customization; evaluate your direct and social marketing campaigns to align accordingly.
- Take advantage of their motivation to self-organize friends and colleagues for grassroots activism to align credit union products and services with those values.
- Focus on the personal connection and meaningful benefits of the credit union as a banking alternative.