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9/5/2016
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The Millennial Mindset: Attracting the Next Generation
Nathan Harness, Ph.D., CFP®
Texas A&M University
Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P.
Neither Delaware Investments nor its affiliates noted in this document are authorized deposit-taking institutions for thepurposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not representdeposits or other liabilities of Macquarie Bank Limited (MBL). MBL does not guarantee or otherwise provide assurancein respect of the obligations of these entities, unless noted otherwise.
September 5, 2016 | 6For financial professional use only. Not for public distribution.
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Anything is possible
The Millennial Mindset
September 5, 2016 | 7For financial professional use only. Not for public distribution.
Perception is important
The Millennial Mindset
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The Millennial Mindset
So what has this created?
September 5, 2016 | 9For financial professional use only. Not for public distribution.
Understanding millennials
The Millennial Mindset
• Question - How many phone numbers can you remember?
• They are excellent at researching data because that is the world they
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data because that is the world they grew up in.
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Understanding millennials
F il i t d
The millennial mindset
Values and purpose
• Family-orientedo Choose to live close to home — or at home
o 30% live at home (compared to 22% in 1980)
• Value work-life balanceo Much less likely to marry as compared to prior cohorts
M i li d t h i t
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• More inclined to purchase experiences over assetso 36% are homeowners (lowest level for <35 age since started recording)
Source: Census Bureau and The White House Council of Economic Advisors, 2014
For financial professional use only. Not for public distribution.
Please refer to the last slide for important disclosures and information.
The Millennial Mindset
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Source: Pew Research Center, General Social Survey data, 1987-2012
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Whom do they trust for advice?
The millennial mindset
Source: UBS Investor Watch, Think You Know the Next Generation Of Investors? Think Again., 2014
September 5, 2016 | 13For financial professional use only. Not for public distribution.
Moneyllennial
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Millennial investment breakdown
The Millennial Mindset
52%
28%
23%
46%
20%
30%
40%
50%
60%
0%
10%
Cash Stocks
Millennials Non-Millennials
Source: UBS Wealth Management, 2014
September 5, 2016 | 15For financial professional use only. Not for public distribution.
Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P.
Neither Delaware Investments nor its affiliates noted in this document are authorized deposit-taking institutions for thepurposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not representdeposits or other liabilities of Macquarie Bank Limited (MBL). MBL does not guarantee or otherwise provide assurancein respect of the obligations of these entities, unless noted otherwise.
For financial professional use only. Not for public distribution.
Source: U.S. Chamber of Commerce Foundation, 2012 and Transamerican Center for Retirement Studies, 2014
Why do you care?
The Millennial Mindset
Millennials currently represent a little over
14.9 millionmillennials
U S h h ld
15%of those with net
worth in excess of
Estimated
$30 to 40
1/3rd of the U.S. workforce.By 2025 they will represent 44% of the workforce.
Almost
1 in 3tU.S. households
have annual incomes exceeding
$100,000
$2 million
milliontransferring to next
generation
entrepreneurs are between the ages of
20 and 35
Source: Department of LaborSource: Ipsos Mendelsohn Affluent Survey, 2014Source: Annual Survey of Affluence and Wealth in America, American Express Publishing and Harrison Group, 2012
For financial professional use only. Not for public distribution.
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The Millennial Mindset
Current clients
10yrs• Average age of clients is rising by six to seven months a year, faster than the
overall population of North America.
• Aging clients means less savings, more consumption, and reduced AUM
10yrs older than average Financial AdvisorAverage client is
70+ Al t 1/4th f li t 70
Source: The State of Retail Wealth Management, PriceMetrix, 2015Source: Want to Foster Growth? Study Client Demographics, FinancialPlanning, 2016
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70+ Almost 1/4th of clients are age 70 or older and hold approximately 25% of firm assets.
Start with your current clients
What can you do?
The Millennial Mindset
y
• Attach your brand to something they are excited about.
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The Millennial Mindset
M ltiple offerings al e proposition is e ol ing be ond prod ct to incl de
Importance of advice
• Multiple offerings--value proposition is evolving beyond product to include investment management and holistic planning
• Education and co-creation Environment
Nearly two-thirds of Millionaire Millennials enjoy investing and would not want to give it up64%
of Gen Xers, and just over half of Baby Boomers and members of the World War II generation respond similarly.
• Planning around technology
Source: The State of Retail Wealth Management, PriceMetrix, 2015
For financial professional use only. Not for public distribution.
55%
Millennials are more likely than other generations to become critical i l f i fl
Embrace Technology
The Millennial Mindset
circles of influence.
Easy access• Website
o Mobile friendly
• Social Media
• Interactive contentInteractive content
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Innovative interactionMillennials love innovative ideas that allow shared learning, social interaction and on demand information
The Millennial Mindset
interaction, and on-demand information.
All third-party marks are property of their respective owners. This is not an endorsement of any online investing service. Delaware Investments does not have a relationship with any online investing service.
For financial professional use only. Not for public distribution.
Communicate
Allow for informal communication channels
The Millennial Mindset
85%of clients willing toAllow for informal communication channels
• Let your website answer questions
• Texting/FaceTime/WebEx
Be a teacher rather than a preacher• Millennial clients don’t want to be talked down to or treated like children
of clients willing to use technology-enables media
43%of advisors felt same
way
• Millennial clients don t want to be talked down to or treated like children
• Statistics aren’t likely to create action
• Use emotive stories and visual narratives
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Focus On The Now
Intertemporal choice – give now focused actions to solve
The Millennial Mindset
p gfuture problems.
• Spend time assessing where they are rather than exclusively focusing
on the future
Segmented planning is likely needed• Cash flow management
I t t t• Investment management
• Employee benefits
• Goal development
• Budgeting
For financial professional use only. Not for public distribution.
Service models
The Millennial Mindset
Offload transactional processes to the client
• Allow client to enter themselves into your CRM
• Co-creation of a plan
• Create brand interaction
Biggest competition is the robo advisorBiggest competition is the robo-advisor
• Leverage to aggregate, provide passive management
• Changes should benefit all generations, not just Millennials
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Service model
Hire a Millennial
The Millennial Mindset
Hire a Millennial• Match a junior advisor with a senior to grow current business
• Together create a marketing plan for the next generationo Invest lower cost asset in long-term Millennial relationship
We understand diversification, but oftentimes don’t follow that model with our human capital.
Create internal succession and higher business valuation with stratified book of business
For financial professional use only. Not for public distribution.
The Millennial Mindset
Young advisor adds growth
There is value in adding nextgen Advisors to a team
10%
15%
20%
25%
Median Asset Growth
Median Revenue Growth
Source: The Fountain of Growth: Demographics and Wealth Management, PriceMetrix, February 2015
For financial professional use only. Not for public distribution.
0%
5%
30 40 50 60
Advisor Age
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The Millennial Mindset
Young advisor adds synergy
• Firms that employed a nextgen advisor grew by almost double the rate of firms that did not between 2012 and 2014
• Having at least one nextgen advisor on your team causes higher income per owner
Source: The Rise of the NextGen Adviser, TD Ameritrade Institutional, 2015
For financial professional use only. Not for public distribution.
Business model
The Millennial Mindset
Teams Based
Approach
Of
Succession
Plan
Finding• Prospecting and leveraging external relationships
Binding
• Managing onboarding of clients and helping to follow through/close business
Grinding
• Plan writing, managing business development initiatives, ongoing services
Grindingg g
Source: Adapted from The New Challenge for the Next Generation of Financial Planners, ThinkAdvisor, 2014
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Undergraduate programs
The Millennial Mindset
For financial professional use only. Not for public distribution.
Graduate programs
The Millennial Mindset
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Graduate programs
Financial planning students have courses in:
The Millennial Mindset
Financial planning students have courses in:
• Fundamental of Financial Planning
• Investment Planning
• Tax Planning
• Retirement Planning
• Estate Planning
• Life Insurance Planning
• Sales and Marketing
• Entrepreneurship
• Philanthropy/Planned Giving
• Counseling
• Life Insurance Planning
• Plan Presentation and Design
For financial professional use only. Not for public distribution.
Technology Partnership
The Millennial Mindset
All third-party marks are property of their respective owners. This is not an endorsement of any vendor. Delaware Investments does not have a relationship with any vendor.
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References1. Millennials: Breaking the Myth, Neilsen 2014. http://www.nielsen.com/us/en/insights/reports/2014/millennials-breaking-the-myths htmlmyths.html
2. 15 Economic Facts About Millennials, Whitehouse Council of Economic Advisor, 2014. https://www.whitehouse.gov/sites/default/files/docs/millennials_report.pdf
6. Millennials Less Trusting of Others”, Pew Research Center, 2014. http://www.pewsocialtrends.org/2014/03/07/millennials-in-adulthood/sdt-next-america-03-07-2014-0-05/
7. Think You Know the Next Gen Investor? Think again.” UBS, 2014. http://www.ubs.com/content/dam/WealthManagementAmericas/documents/investor-watch-1Q2014-report.pdf
8. Better Money Habits Millennial Report, Bank of America/USA Today, 2014 http://about.bankofamerica.com/assets/pdf/bmh-millennial-report.pdf
For financial professional use only. Not for public distribution.
References
9. Class of 2015 Has the Most Student Loan Debt In U.S. History, Market Watch, 2015. http://www.marketwatch.com/story/class-of-2015-has-the-most-student-debt-in-us-history-2015-05-08
10. The Millennial Generation Research Review, U.S. Chamber of Commerce Foundation, 2012. http://www.uschamberfoundation.org/millennial-generation-research-review
11. 15 Facts About Millennials’ Retirement Readiness…and 7 Steps For Long-Term Success, Transamerican Center for Retirement Studies, 2014. http://www.transamericacenter.org/docs/default-source/resources/center-research/tcrs2014_factsheet_millennials.pdf
12. Millennials: Confident. Connected. Open to Change., Pew Research Center, 2010. http://www.pewsocialtrends.org/2010/02/24/millennials-confident-connected-open-to-change/
13. Next Generation Strategies for Advertising to Millennials, comScore, 2012. http://www.comscore.com/Insights/Press-Releases/2012/1/comScore-Releases-Report-Next-Generation-Strategies-for-Advertising-to-Millennials
14 The New Challenge for the Next Generation of Financial Planners, ThinkAdvisor, 2014 http://www.thinkadvisor.com/2014/04/15/the-new-challenge-for-the-next-generation-of-finan?page=3
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Contact information
Delaware Investments
This presentation is for financial professional use only.
Please consult your compliance departments before accessing any social media networks for a business purpose.
The presentation is for illustrative purposes only and is not an endorsement of any app, service, or publicly traded company.
This presentation is not a recommendation to buy or sell a particular security.
2005 Market StreetPhiladelphia, PA 19103-7094
Individual investors:800 523-1918
Advisors:877 693-3546
For more information about
The views expressed are those of Dr. Harness and do not necessarily reflect those of Delaware Investments or any of its employees.
Dr. Harness agrees to hold Delaware Investments harmless from any claims of intellectual property rights infringement that may arise out of Delaware Investments’ use of the foregoing materials.
Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries.
Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
Neither Delaware Investments nor its affiliates noted in this document are authorized deposit-taking institutions for the purposes of the Banking Act 1959 For more information about
p g p p g(Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited (MBL). MBL does not guarantee or otherwise provide assurance in the respect of the obligations of these entities, unless noted otherwise.