engaging generation y

Private & Confidential Project Management Institute 13 November 2012

Engaging

Generation

1

Robert Gardner

13 November 2012

Private & Confidential Project Management Institute 13 November 2012 2

Generation Y: Impact on Retirement Planning 2025

http://www.youtube.com/watch?v=6zOebeD-xXE&noredirect=1

Private & Confidential Project Management Institute 13 November 2012 3

Millennial Generation

Generation Next

Net Generation

iPod Generation

Echo Boomers

Generation Y


Baby Boomer Generation X Generation Y Gen Z

• Now aged 49-64 • Idealistic, career-oriented, consumerist • Promoted ‘young’ and propped • Peak income earning 1991-2005 • Succession planning, advisory boards, non-exec directors

• Now aged 34-49 • Realists, cynical • Held back by “old fart log-jam” • Peak income earning 2006-2021 • Office sandwich gen, resentful of Boomer focus on Y’s • Must deal with baby boomers in retirement

• Now aged 19-34 • By 2025 will make up largest population of workforce and fill senior management roles •Experiential, ethicists, uncommitted to career/relationships • Helicopter kids; KIPPERS • Technology savvy; global thinking • Inherit Boomer wealth

• Aged 19 or less • Will enter workforce from 2020 • First generation to be taught internet computer technology from age 5

Generation Timeline

1993-Present 1978-1992 1963-1978 1948-1962

4


How Times Change....

5

5

Generation Y Generation X

5


Generation Y

Pension Provision – Shift in Responsibility

6

Defined Benefit Defined Contribution

Timeline

0 10 20 30 40 50 60 Age 70

Defined Contribution

Defined Benefit


Generation Y

Challenges

7

7

“I believe that I will start my pension in my early 30’s.

By this stage of life, I will have steady income and thus

can afford to save a chunk of my income without a

compromise in my standard of living.”

-Vivek, student at Wyggeston & Queen College

• Attitude of consumption over savings

• Increased cost of living

• Myopic – short-term goal oriented

• Demand instant gratification

• Lack of financial education

• “Tech dependent” for communication

“I want to be able to do things now. I don’t want to

wait until I’m fifty and have a million dollars. By then I

won’t want to do these things and I will have missed

out”

-Anonymous

7


43%

Have never received any form

of financial education

“ I think the main reason for low uptake on pensions by

students is due to lack of knowledge and education of

saving and pensions schemes.”

-Anya, student at University of Oxford

Generation Y

Financial Planning

• In England and Wales financial planning is not

compulsory but features in Key Stage 3&4 (11 - 16yrs)

• Japanese children taught about pensions and saving for

retirement from an early age (11 - 18) by local

municipality officials

• Sessions not limited to schoolchildren

• All nationals between 20 - 59 are required to enrol

in the national pension plan

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Engaging Generation Y

Social Media and Technology

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Redington’s Seven Steps

10


Engaging Generation Y

Lifestyle Risk Management Framework

11

11

Objective Example Objective Example Performance Actual

Performance

State Your Objective

I want to retire at 65 with a

sufficient guaranteed

income to support my family

and myself.

I have £X,000 available in a lump-

sum upon my retirement in Y years

State your Risk Targets

To avoid sustained losses

and focus on steady-not-

super growth

Maximum loss any year should not

exceed 10% of my savings

State Your Dream Goals I have a dream – to retire

happy when I’m 55

Savings contributions are greater

than originally planned

State your Biggest Fears

I am unable to save for

retirement or rainy days

AND spend on a sunny day

My long-term savings plan does not

leave enough cash in my pocket to

cover short-term expenses

Metric is at or above target Metric is more than 10% away from target Metric is within 10%of target

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Applying DB to DC

12

Cutting Edge DB Pension Fund

“Return Asset” Portfolio

Liquid Alpha& Beta

40%

70% Developed / 30 Emerging MSCI Equities, 10% Volatility Target

40% Risk Parity

20% CTA

Liquid Credit

40%

1 to 10 Year Go Anywhere Credit, 75% Investment Grade, 25% High Yield / Leveraged Loan

30% Over 10 Year GBP Senior Investment Grade Credit

30% Over 10 Year USD Senior Investment Grade Credit

Illiquid Credit

33% Investment Grade Secondary Swaps

33% PFI Debt

33% Secured Leases

Illiquid Alpha & Beta

50% Cat Insurance

50% Macro Hedge Fund

Portfolio after Applying DC Constraints

Liquid Alpha& Beta

40% 10% Vol Controlled Global Equities Fund (Passive)

40% Risk Parity Fund (Semi-Passive)

20% Absolute Return Funds (GARS, Dynamic Asset Allocation) (Active)

Liquid Credit

40%

75% Investment Grade Fund (Passive) 25% High Yield Fund (Semi-Active)

30% Longer Duration UK Investment Grade Fund (Passive)

30% Longer Duration US Investment Grade Fund (Passive)

Illiquid Credit 100% N/A


50% Cat Insurance Fund (Semi -Active)

50% Real Estate Fund (Semi-Active)

Pragmatic “Day 1” Solution

Liquid Alpha& Beta

100% Risk Controlled Multi-Asset Strategy

Liquid Credit 100%

Broad Credit Fund (Active) and/or Range of Credit ETFs

Illiquid Credit 100% N/A


100% Real Estate Fund (Semi-Active)


Generation Y

Financial Education

13

Freddie Ewer

Analyst

Direct Line: 020 3326 7133 [email protected]

Jonathan Letham

Analyst

Direct Line: 020 3326 7108 [email protected]

• Financial education for young people in the UK is woefully inadequate, particularly given the responsibility placed on

the shoulders of young people by the DC pension system.

• Moneythink fills this gap, using the skills developed by young professionals to share knowledge and skills.

• Moneythink Redington is actively looking for partner organisations and schools to participate in our programme.


13-15 Mallow Street London EC1Y 8RD Telephone : +44 (0) 20 7250 3331 www.redington.co.uk

Contacts

Robert Gardner Founder & Co-CEO

Direct Line: +44 (0) 20 7250 3416

Telephone: +44 (0) 20 7250 3331

[email protected]

14

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for private customers.

The information herein was obtained from various

sources. We do not guarantee every aspect of its

accuracy. The information is for your private information

and is for discussion purposes only. A variety of market

factors and assumptions may affect this analysis, and

this analysis does not reflect all possible loss scenarios.

There is no certainty that the parameters and

assumptions used in this analysis can be duplicated with

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rates or other reference rates or prices which appear

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