The concept of retirement may need to be retired
Do you agree with the following statement: Millennials are needy and obsessed with technology; further, they don’t have a pressing concern about managing their finances and they are job hoppers.
This is general description that people give when discussing Millennials. And whether the characterisation is fair or not, labels often stick.
The truth of the matter is that Millennials make up 30% of the South African job market; these are your clients and future clients. How do you engage with them effectively? This issue was discussed at the 2018 Sanlam Benchmarks Survey.
Deal with it
Karishma Ramkelawan, a consultant at Simeka, said that the reason why it seems that Millennials are obsessed with technology is because they are. They grew up with it and they are used to trusting it as an effective research tool, much like Baby Boomers trusted encyclopaedias.
“The internet has opened a lot of doors for Millennials when it comes to research and education. It can be argued that Millennials are far more educated than any generation before it. However, Millennials have inherited a world that faces far greater challenges then some of the generations that came before it. This is why the characterisation of Millennials, while true, is unfair,” said Ramkelawan who pointed to the fact that Millennials inherited a broken planet which is being driven by Global Warming, fractured economies which caused the 2008 Global Financial Crisis (GFC), and oppressive political systems.
An issue of trust
Let us discuss the characterisation that Millennials do not have any pressing concerns about managing their finances.
“It is true that Millennials are not the best at managing their finances. However, it is also true that many Millennials who are working today entered the job market during the GFC. They entered into a job market that was characterised by cost cutting and have never had the opportunity to enjoy the privileges that generations before them enjoyed,” said Ramkelawan.
They have also got a very particular view of retirement and retirement saving. Ramkelawan added that Millennials don’t really trust the conventional view of retirement because they have seen many crises unfold. They don’t trust financial institutions because these crises have affected their parents and grandparents, many of whom lost a lot of their retirement savings through no fault of their own.
“Trust? Who will Millennials trust?” asked Ramkelawan.
Precarious positions
This leaves financial advisers in precarious positions. Millennials are their future client base, so how can they build trust?
“Advisers need to get creative. Perhaps the word retirement needs to be retired. At heart, Millennials are unconventional and are emotionally invested in a number of causes. They are invested in causes that give them something to believe in, something that works towards a greater good or is good for the environment. If advisers can craft messages that encapsulate these ideals, they will build credibility and a tone that Millennials can trust,” said Ramkelawan.
The value of technology
In order to build a good value proposition, advisers need to go back and look at what technology has created.
Beyond the actual product that Uber, Airbnb and Amazon offer, their actual value is embedded in the platform they have created.
They have taken a consumable product and placed it on a platform that has no roadblocks, that is convenient and easily understandable. Transactions are done using very few middle men and can be tracked in real time.
“The above scenario is relatable to Millennials. They embrace it because they can understand it,” said Ramkelawan.
Life experiences
She added that advisers should also look at the consumption behaviours of Millennials.
There is a reason why vacations that include white water rafting, bungee jumping and canopy zipline tours are currently more popular than beach holidays. Millennials focus on experiences.
“Perhaps advisers should sell the concept of retirement by making it a life experience. Going back to the vacation scenario. Millennials do not go to travel agents to book holidays any more. They research these via social media and book them online. Advisers should communicate with Millennials on the platforms that they frequently use… use it to your advantage,” concluded Ramkelawan.
Editor’s Thoughts:
It’s not that Millennials don’t want to save for retirement, it’s that they need to be given a reason to save for retirement and they need to be showed how to save for retirement. Seems like this is another reason why the role of the adviser has never been as important as it is now. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
