Managing the impacts of Australia’s ageing population is likely to be one of the country’s major socioeconomic challenges in the decades ahead. For accounting and advice firms, this demographic shift also presents a particular dilemma — how to connect with and cater to the next generation of clients.
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For many firms, keeping up with the current pace of technological and regulatory change is challenging enough, without thinking seriously about the long term. But if your business planning only covers the next 12 or 24 months, you’re missing out on opportunities to tap into the client of tomorrow.
Generation Y broadly refers to the demographic cohort born in the 1980s and 1990s. Also referred to as ‘millennials’ a term considered to apply to individuals who reached adulthood at the turn of the 21st century. Here are 5 things you should know about this valuable client segment.
1. They’ll be your biggest client base
Today’s savers and borrowers are tomorrow’s wealth accumulators and investors. To gain an edge over your competitors in the advice and accounting space, you need to be ready and able to guide young Australians towards achieving their financial goals.
To do this, you’ll need to attract millennial clients to your firm and articulate the benefits of your service offering. As a starting point, it’s worth thinking about the service expectations, communication preferences and financial literacy levels of your existing younger clients.
According to KPMG research, in 2010 Gen X and Gen Y held a 36% share of financial assets, but by 2030 this figure will have skyrocketed to 70%. It’s therefore crucial to turn your attention to the important pool of millennial clients now so you can start building long-lasting relationships with them.
2. They’re not all created equal
Millennials are far from being a homogenous group. While they share certain behaviours and attitudes, their financial circumstances are varied and they have diverse lifestyle needs and financial objectives.
That means the days of offering a blanket one-size-fits-all solution are well and truly over. To engage the next generation, your business needs to offer personalised service tailored to the individual. So it’s more important than ever to harness the capabilities of digital platforms and analytics to gain valuable insights into the needs of Gen Y.
3. They manage their finances online
Millennials are a tech-savvy generation that depend on devices and apps to stay in control of their finances. These days 98% of millennials choose online and mobile channels for day-to-day banking, but they still prefer face-to-face contact for more complex financial decisions like taking out a home loan.1
As online research becomes the most popular way to find new financial products and services, building a strong digital and social media presence is key. And, since millennials have such highly developed digital skills, it’s essential to provide a seamless experience that integrates your online channels with your in-house services.
4. They’re focused on savings, not wealth
At the moment, millennials are young and enjoying life to the full, so they tend to take a short-term view of their finances. And since many of them believe it’s not worth investing with the amount of capital they have, they’re missing out on opportunities to make the most of long-term returns.
The key to maximising the wealth of millennials is to help them understand the benefit of a sound investment strategy that will enable them to reach their lifestyle goals sooner.
5. They’d like to be more financially savvy
Most millennials prefer to stay in the driver’s seat when it comes to their finances. Of those surveyed in KPMG’s study, only 5% have enlisted the aid of a financial adviser, while 84% say they don’t need professional advice.1
However, they would like more help managing their money — around two in three millennials say they would like financial coaching so they can make better decisions.1 But as a cost-conscious generation that values fee savings over other types of benefit, they’re reluctant to pay for assistance.
To overcome this barrier, it’s vital to demonstrate the value of your services, with a focus on benefits and outcomes for the client. That means helping millennials save money and build wealth while maintaining full control over their financial decisions.
1 KPMG, Banking on the future: The expectations of the Gen Y professional, 2015.