EBOOK. Reaching the Millennial Investor: A guide for financial advisors MAXIMIZER CRM LIVE. Published By

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1 EBOOK Reaching the Millennial Investor: A guide for financial advisors MAXIMIZER CRM LIVE Published By

2 TABLE OF CONTENTS Introduction 3 Who are the millennials and why do they hold to the key to tomorrow s wealth 5 Other characteristics of millennials 8 Where do they turn to for advice? 11 How to work with the millennial client 13 Introduce Millennials to the joys of RRSPs 16 Why you should embrace technology when targeting millennials 18 Conclusion & Additional Resources 20

3 Introduction

4 Introduction Millennials are the largest demographic group in history, the most highly educated and the most technically savvy however they face financial challenges that make them stand out from previous generations. This ebook looks at how advisors can reach out to Millennials, while focusing on the types of investments and financial products they might be interested in.

5 CHAPTER 1 Who are the Millennials and why they hold the key to tomorrow s wealth

6 Who are the Millennials and why they hold the key to tomorrow s wealth Canadian Millennials (a.k.a. Generation Y) were born between the years of 1980 and So their ages range between 16 and 36. There are some key differences between Canadian Millennials and their U.S. counterparts. The definition covers 9.5 million Canadians or 27% of the population. Canadian Millennials account for 37% of the workforce. By 2025 that number is expected to grow to 75%. While they may not be as wealthy as the Baby Boomers are today, Millennials hold the key to tomorrow s wealth. Key facts to consider about this group: Millennials are more likely to seek advice from their parents then other generations. Millennials have the lowest level of financial literacy of any other generation, a U.S. study shows. They are highly active on social media networks. 42% of Millennials in Canada are currently living with their parents (Statscan) They hold fewer equities and a higher proportion of cash than older generations. 6

7 Millennials have a lot of competing goals for their money, goals that include: Saving up for a mortgage down payment Paying mortgage and home-related costs Paying off debt Raising a family The importance of lifestyle Love of taking a vacation It is probably why half of all Millennials are CONSTANTLY stressed about money. Most potential home buyers (60%) are struggling to save for a house that meets their desires. This is a demanding group: Most would rather delay home ownership until purchasing a property they want (Bank of Montreal). Homeowner stats: One half of year olds own a home. Three quarters of renters plan to buy within 5 years. Most potential buyers (60%) are struggling to save for the house that meets their wants and needs. Their response: save! 59% of Millennials have an emergency fund Financial priorities and goals: 26% say they are saving more (versus 23% of the population). 25% say they are clearing debt (vs 30% of the population). 20%: Investing effectively (vs 24% of the population). 17%: budgeting (vs 14% of the population). 7

8 CHAPTER 2 Other key characteristics of the Millennials

9 Other key characteristics of the Millennials This is a very debt-averse generation and they see the virtue of saving at least for short term goals. But they are not saving for the long term. 57% want to retire by 60, but only 27% think they can. Four in ten (43%) of the affluent Millennials surveyed believe they will have more than enough income when they retire, putting saving for retirement near the bottom of their priorities, according to the Manulife Investor Sentiment Index, October They are not putting money away for retirement and are not concerned about running out of money in retirement. Four in ten (43%) of the affluent Millennials surveyed Blame it on their youth retirement is far away; other priorities are more immediate. Millennials tend to save for shorter term goals instead more so than other age groups. They tend not to take advantage of help such as their company s employee contribution matching programs (36% don t even know if their employer has one, according to Toronto Dominion Bank). They are not investing Millennials are very conservative investors. While they view themselves as being risk tolerant and focused on growth, they hold fewer equities and a higher proportion of cash than older generations even people in their 70s. Roughly 60% are more concerned with making money and protecting capital than growing money according to MFS Investing Sentiment Insights. believe they will have more than enough income when they retire, putting saving for retirement near the bottom of their priorities MANULIFE INVESTOR SENTIMENT INDEX October

10 Low financial literacy Millennials have the lowest level of financial literacy of any group, according to a U.S. study by PriceWaterhouse Coopers LLP and the George Washington University. Key findings: Only 8% of the group demonstrate high financial literacy. 24% showed basic financial knowledge. In Canada, a third of those between the ages of 18 and 33 said they are not at all knowledgeable about retirement saving plans, according to a TD Bank survey that was published by Canadianbusiness.com. But they will admit when they don t know and are keen to learn. Investment comfort level: Hold higher levels of cash (27%) compared to all the older generations (including those over 69 years). The older sub-segment graduated around the time of the financial crisis and can be apprehensive about investing. We need to teach them how to save for retirement while still having the things they need now. INSIGHT: Time is on their side. 10

11 CHAPTER 3 Where do they turn to for advice?

12 ??????????? Where do they turn to for advice? Not to you..to Mom and Dad. Their helicopter parents have always been there and they love to offer advice. They often turn to their parents for approval of their decisions. Bank of mom and dad often help out with the down payment. A Bank of Montreal study recently found that 44% of millennials expect a loan or gift from relatives when jumping into a first home, according to a Globe and Mail report. Key insight for advisors: You need to get to know the parents and you need to sell them too. 12

13 CHAPTER 4 How to work with the Millennial client

14 How to work with the Millennial client Meet the parents and get to know them. Include them on communications (Millennials will forward to them for approval anyway). Make sure your information is in a format that both can relate to. Present a polished product. Millennials tend to seek parental approval and will likely forward anything you send to their parents for review. So it is best to involve them from the start wherever possible and appropriate. Note that their communication styles are different Millennials tend to favor more frequent, shorter communications. They prefer visual where appropriate, and informal language. Parents see the data as being important. They will do the deep dive and offer an opinion. When it comes to both advice and presentation, both Millennials and their parents expect a high level of sophistication. Max out your value proposition Give them advice based on a personalized financial strategy. Show them how they can achieve their personal financial priorities. Educate them about personal finance, savings vehicles, and investment options. Be the coach, not the principal. They value advice and they need it. They are stressed. Help them prioritize their many competing financial demands and recommend appropriate financial strategies. They can get information online from peers or parents demonstrate that only you can help them get what they want and need and show them how to do it. Show them that they can save for today AND tomorrow. Teach them about basics such as Automatic Savings Plans, Tax Free Savings Accounts and the value of saving for long-term goals. Prove your value to them and to their parents who are their advisors. You need to sell to parents too. 14

15 Coaching the Millennials You need to educate them, but don t preach or dictate. Be their partner. They value collaboration. Millennials are validators vs soloists and delegators If they work with an advisor, they expect to work with the advisor and play a significant role in decision making. Help them grow in a way that s right for them Tough love won t work for these investors. Work within the comfort zone of these conservative investors. Understand your investments, keeping in mind that they are socially aware. Millennials saw the damage that the financial crash in did to their parents investments. But they won t be able to meet all their spending goals if they keep putting their money in cash. Find ways to help them grow their money without going too far beyond their risk tolerance comfort zone. Be mindful of the Millennials social awareness: Responsible Investing and social causes are important to this group. They seek a balance between ROI and positive social impact. Important statistic: two-thirds consider environmental, social and governance (ESG) factors when making investment decisions (compared to 48% of Gen X and 40% of Boomers) (Ipsos-Reid/OceanRock Investments reported in Investment Executive, Canada s leading publication for the financial services industry). Know what s going on behind the scenes with any investments you recommend: They are more likely to pull out of investments with objectionable corporate activity on environmental or social issues. Consider Responsible Investment products: They are more likely than other age groups to invest in these products. 15

16 CHAPTER 5 Introduce Millennials to the joys of RRSPs

17 Introduce Millennials to the joys of RRSPs Make sure they understand the basics, how RRSPs can help them, and the strategies they can use: RRSPs are a great vehicle to save for today AND tomorrow. Use it for a tax refund today which can go towards down payment, mortgage or shorter-term savings, while putting money aside for tomorrow. Home Buyers Plan (HBP) lets them withdraw as an interest free loan for down payment. Can also tap into Lifelong Learning Plan (LLP) if returning to school. Make them aware of free money like employer s RSP matching programs. Time is on their side. We need to teach them how to save for retirement while still having the things they need now. RRSPs are a great vehicle that they re probably not tapping into. It can help them save long term without sacrificing shorter term goals, if you teach them how to use them strategically. The parents grew up on RRSPs so they will be on board. 17

18 CHAPTER 6 Why you should embrace technology when targeting Millennials

19 Why you should embrace technology when targeting Millennials High Net Worth and affluent millennials tend to prefer or phone over in-person. They tend to be Responsive and mobile friendly. They are tethered to smart phones, spend 2.2 hours each day on mobiles, and check phone at least 10 times an hour. Key statistic: Millennials are the most highly active group on social media. According to Environics/Statistics Canada, 73% access social networking every day (vs 42% of Generation X and 24% of Baby Boomers). They are comfortable with technology and enjoy learning this way. 4 key ways to embrace technology when targeting Millennials Communicate via technology after the initial face to face meeting. Ensure your website is responsive. Be seen on social media and reach out to them via this channel. Give them access to on-line tools and information. Why your CRM is an indispensable tool CRM software system like Maximizer Wealth is an indispensable tool for wooing the Millennial investor because: Millennials may respond better to shorter, more frequent communications and phone calls. When including the parents, you ll have that many more contact reports to record. Tracking communications becomes more important than ever. Maximizer Wealth Manager records all research, intelligence gathering, contact points. Millennials are accustomed to fast responses, so you will need to reply on the run. Maximizer Wealth Manager is cloud based, so info is at your fingertips 24/7. 19

20 MAKING YOUR DECISION

21 Making Your Decision It is clear from previous research that CRM can be a hugely valuable tool for increasing a company s productivity, thus giving the company a competitive edge. To fully capitalize on the benefits of CRM an enterprise needs to implement a system that has the maximum impact on efficiency. Finding the right CRM system involves looking at how business objectives can be met by increasing staff effectiveness through the adoption of technology that not only provides a centralized location of all business data, but also gives the individuals within the business the means to better achieve their key goals. One way of ensuring this is to identify pain points within the business and note where inefficiencies arise, which processes could be improved and what other areas see staff struggling. This means finding a solution that will be widely adopted throughout the organization, one that staff will be happy to use because it makes their lives easier, not more complicated. There is no one-size-fits-all answer to what type of CRM solution will work for a company. You need to find a solution with the performance levels, flexibility and functionality your business actually needs. If it is too complicated and off-putting then staff will not use it and productivity will not increase. 21

22 About Maximizer Maximizer CRM is fueling the growth of businesses around the world. Our CRM solutions come fully loaded with the core Sales, Marketing and Service functionality companies need to optimize sales productivity, accelerate marketing and improve customer service. With flexible on-premise, our cloud and your cloud deployment options, tailored-tofit flexibility, state-of-the art security infrastructure, industry-specific editions and anywhere/ anytime mobile access, Maximizer is the affordable CRM solution of choice. From offices in North America, Europe, Middle East, Africa and AsiaPac, and a worldwide network of certified business partners, Maximizer has shipped over one million licenses to more than 120,000 customers worldwide. AMERICAS ( HEAD OFFICE ) Maximizer Services Inc. 208 W. 1st Avenue, Vancouver, BC, V5Y 3T2, Canada Sales Phone info@maximizer.com Website EUROPE / MIDDLE EAST / AFRICA Maximizer Software Ltd. 1 The Courtyard Eastern Road, Bracknell, Berkshire, RG12 2XB, United Kingdom Phone +44 (0) enquiries@maximizer.com Website AUSTRALIA / NEW ZEALAND Maximizer Software Solutions Pty. Ltd. Level 1, Suite 14, 32 Delhi Road North Ryde, New South Wales, 2113 Australia Phone +61 (0) info.anz@maximizer.com Website Copyright 2016 Maximizer Services Inc., Maximizer Software Ltd., Maximizer Software Solutions Pty. Ltd. All rights reserved. Maximizer CRM is a registered 22 trademark of Maximizer Software Inc. Maximizer CRM, Maximizer CRM Live, Maximizer Contact Management, and other product names may be trademarks of their respective holders. This is for information purposes only. MAXIMIZER SOFTWARE INC. MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, IN THIS SUMMARY.