Generation Y’s tend to get a bad rap in the media and from older generations for being free spenders disinterested in saving for their future.
But Steve Crawford, who runs the Your Spending Coach programme at Experience Wealth, thinks this reputation is undeserved. At 35, he is on the cusp of Gen X and Y, so knows what he is talking about.
“I think across every generation you’re going to get good and bad spenders. It’s really hard to take a broad brush view on an entire generation of people.”
Gen Y – those born between 1980 and 2000 – typically spend more money on themselves as they are setting up a career and social networks, and this is important at this stage of their life, Crawford says.
But many young people do want financial advice – 90% of Crawford’s clients are Gen Y.
“Gen Y has been the mystery generation for about five or six years. Ever since I’ve been doing it, I constantly get asked how to get more Gen Y clients. It’s not a mystery.”
But financial advisers are shooting themselves in the foot if they do not tailor advice to their younger clients’ needs. A good adviser will deliver the answers to the questions around those big life-defining moments like buying a first home, says Crawford.
So how to attract younger clients in the first place?
“You can’t take a traditional advice model that’s been built to suit retirees and pre-retirees, give it a Facebook page, put a hashtag on it and expect it’s going to work,” Crawford warns.
“A lot of people in the industry are telling advisers all they need to do is ramp up social media activity and then magically like the Pied Piper all these Gen Y’s see you on Facebook, start hunting you down and organise a meeting with you.”
However what social media could do is help Gen Y do social proofing – looking at your Twitter account, Instagram pictures, LinkedIn account – to see if the image you are portraying matches what you say you stand for.
“You need to have a relevance to your prospective clients, not just a presence.”
And once you have attracted Gen Y in the door, you need to keep advice relevant and adapt your practices to suit their style.
“Gen Y is the information generation. They know what their options are before they’ve come in the door. Gen Y probably knows more about you than you know about you, before they even come in the door,” says Crawford.
The benefits of having Gen Y as clients is they are the “entourage generation” and can be your best marketers.
“So if you do a really good job they will share you with their friends, colleagues and family. Because they’re not embarrassed about money,” Crawford says.
“The benefits are really worthwhile. We love dealing with Gen Y because they’re just so honest and they’re a lot more fun. The stuff they are doing is exciting.”
Steve Crawford’s tips for your Gen Y clients:
- Draw up a plan around the goals they want to achieve, the wealth they’re trying to build, and the lifestyle they’re trying to maintain and protect.
- Offer to help them with a spending and savings plan. Focus on good money management, budgeting and cash flow.
- Gen Y want to see exactly how much it’s going to cost them. Don’t have a pricing model that’s linked to a percentage of assets, instead run a flat fee model with on-going coaching costs.
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