Gen X, Gen Y…nice terms but the definition keeps changing. If you have dealt with the baby boomers and their kids, let us accept one thing. These kids are different!!
When I say Gen Y in terms of financial planning, I am using 1984 (George Orwell) as the cut off for their birth dates. They could be engineers, doctors, management graduates, qualified accountants, or sports people. Clearly they are different. Let us look at their characteristics:
- They have seen a prosperous India ONLY. No ration lines, no shortages, 8% growth, parents owning houses, and driving cars – these are kids of a prosperous generation. Yes personally not all of them are rich, but they are part of a rich society.
- The urban upper middle class Gen Y is very different from the rural GenY but there is a quick catch up.
- They need not save / invest for their parents, and many of them will inherit at least one house – self or spouse.
- They may have lived a sheltered, pampered life, but job losses bring them to earth quickly.
- They are committed to a relationship, but not a slave to one – they will happily walk out.
- Many of them could be in the Rs. 70L joint ctc bracket, but about Rs. 18-20L is more like the norm per head.
Let us see how an IFA has to tweak his approach to this group of fast growing kids…
- It is not about Retirement planning, it is about break / hobby / business planning: If you talk to a 31 year old about retirement, it is justified from a planner’s point of view, but these kids will laugh. It is just too far away into the future. However they are willing to take a change in career paths. I see many accountants working as Business Analysts and trying to move as Project Managers. They are willing to quit their job at 28 to do a 1 year MBA (that is the average age in ISB, Hyderabad . Could be similar even in the IIMs). So they need a lump sum for taking a break, going on a Himalaya trek for 6 months, change of career, and stopping to work (do not call it retirement, they will resist that word).
- It is about Life Counselling: ‘Subra sir I wish to do my MBA – should I do it from IIM, ISB or should I go abroad? Well not all IFAs can develop the ability to answer such questions! However over a long time if you have a good database of friends / clients / friends / relatives who can answer such questions, you could create such resource person. They start interacting and realize the value of experience, and seek one line, one coffee, one lunch kinda ‘advisory’. So provide or create a circle.
- They are challenged for time: It is not as though they cannot understand mutual funds, financial planning, etc. but they are hugely challenged for time and many, many, many of them WILL not want to do it themselves. They are under far greater stress. Imagine if they come home at 9 everyday, work on weekends, try to keep in touch with their parents, in laws, own kids, school friends, college friends, colleagues,…seeing stupid tables, and comparing values etc. is the LAST THING that they want to do.
- Communicate where they are: They are on FB, blogs, twitter, LinkedIn. If you are an adviser can you afford to be missing. Yes you may want to keep your private life and professional life separate, but you cannot really run away from the social media. You will have to write, talk, tweet, share other’s post. The confidence that you are adding value to the client has to come from within. As an adviser you add value in hand holding, in mentoring, in helping them do sensible asset allocation, not just from choosing in which fund to invest. Tell them what you can do and what you cannot do. For example telling them that you will NOT do stock selection is a message that you do not wish to be in the unregulated PMS or direct equity advisory space. Lack of regulation means client expectations can be too damn heavy. Match their wavelength, language, brevity and speed.
- I am not sure if expensive marketing gimmicks work: I am not sure if these skeptical kids are impressed with expensive gifts. They see through all these actions very quickly, so try to tell them stories instead of buying them gifts. Choose reasonable places to eat out, do not try to overwhelm them with 5 star lunches. They do not like that. Instead choose a quaint joint that has history. Understand that they are stressed for time, so make the experience a good one. There has to be good learning for them, apart from the money that their portfolio makes.
- Be clear, blunt, fair and honest. Remember these kids are already being asked about their marriages and progeny by all and sundry. So know what is sensitive and what is within your scope of asking! Yes you need to plan for the finances, but do not push hard. I now know of 4 gay kids and yes their financial planning is a little different, but asking them about marriage and kids could be putting them off. Keep the line safe.
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