From Boomers to Zoomers - Building a gen-savvy generation

Roné Swanepoel, Business Development Manger at Morningstar Investment Management SA

On 17 March, we launched Morningstar South Africa’s Adviser 2.0 series with a discussion about the different generations and their generational biases. In this session, our guest speaker Graeme Codrington, future of work expert, dismantled some of the typical generational biases, looked at what the future may hold for earners, and considered how the next generation of retirees might look nothing like the current generation. Below is a summary of some of the key insights Graeme shared with us on the day.

When it comes to work and money, different generations have vastly divergent approaches and priorities for their finances and careers. This means that for financial advisers, it’s vital to understand these differences if you’re going to successfully engage with, and provide advice to, multiple generations of employees, colleagues and earners.

In the next 20 years, we’re probably going to see the biggest intergenerational transfer of wealth in living history, involving trillions of rands. To stay relevant and build strong relationships with your clients, it’s critical that financial advisers understand the differences in generational dynamics, and rapidly adapt the way they build relationships and offer services across the different generations.

According to Codrington, a scary fact is that when generational wealth is passed on, younger generations typically re-evaluate all their financial services partners. They change their banks, their advisers and their insurance companies. This should be causing the adviser industry sleepless nights.

“We might have been living in the same houses, going to the same schools, and working in the same offices, but we’re living in different worlds,” he said

The key is to understand that people see the world differently based on their generation. Their behaviours are shaped by the world they are born into. Take the ‘silent generation’, for example. Born in the Depression and war years of 1929-1945, they hate debt and hang onto their money. They don’t want to buy new cars; they want to know how their legacies can uplift their grandchildren, it’s all about passing on their wealth.

Baby Boomers, born between 1945-1965 work hard, but they want to enjoy the rewards of life. They don’t mind living on credit and they want to know how their investments will maintain and improve their quality of life. Here’s the sobering thing, says Codrington: they’re not going anywhere soon. They’re supposed to have retired, but instead, they’ve ‘re-tyred’. They’re hanging around - a key observation for advisers who mostly have a large part of their assets under management with the baby boomers.

Gen X’ers (born between the late 60s and mid-80s) were born into a time of change. They want immediate gratification and value experiences over assets. They’re tech-savvy, but value the human touch – trust first, then technology. Critically, they’re going to be the biggest wealth creators in the coming decade, according to a Deloitte study. We’ve got to understand their buttons and pain points if we’re going to be part of that boom.

Gen Y, or Millennials (born between the mid-80s and the early 2000s) are the world’s first truly digital generation. They literally grew up with technology in their hands. They’re generally the younger people in your business and on your books. They work to have a life, they’re globally aware, and they need to know ‘why’. Importantly, they want to engage digitally, have a say in their investment strategies and be able to track those investments on a dashboard.

So, why does this matter? As Codrington says, if you’re going to do the best job you can of servicing an existing client base and capturing new clients, it’s vital that you understand what’s important to them – and that’s often largely driven by their generational biases and preferences.

The more you can show that you understand who they are and reflect their values, the better.
Different clients expect different approaches and different levels of service. Older generations may want to look you in the eye and build a relationship. Younger generations want to meet by video conference, interact via WhatsApp, and know where you’re putting their money, and why.

By understanding their generational needs and drivers, you can find unique ways to help them – and that way, you’re embedded in their lives for years to come.