the millennial mindset...9/5/2016 1 the millennial mindset: attracting the next generation nathan...

9/5/2016

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The Millennial Mindset: Attracting the Next Generation

Nathan Harness, Ph.D., CFP®

Texas A&M University

Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P.

Neither Delaware Investments nor its affiliates noted in this document are authorized deposit-taking institutions for thepurposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not representdeposits or other liabilities of Macquarie Bank Limited (MBL). MBL does not guarantee or otherwise provide assurancein respect of the obligations of these entities, unless noted otherwise.

PRE-MILLENNIALS 1215 (15657) © 2016 Delaware Management Holdings, Inc.

The Millennial Mindset

Millennials: Who are they?

• Born early 1980s to early 2000s

• 1/3rd of the U.S. population (projected to overtake Boomers this year)

• Most educated generation in history (61% attending college)

• 42% are non-white

September 5, 2016 | 2For financial professional use only. Not for public distribution.

Source: Neilsen and The White House Council of Economic Advisors, 2014

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Millennials: Who are they?


• 15% were born in a foreign country (largest since 1920)

• 36% are homeowners (lowest level for <35 age since started recording)

• 30% live at home (compared to 22% in 1980)

• Much less likely to marry as compared to prior cohorts


Source: Census Bureau and The White House Council of Economic Advisors, 2014

The millennial mindset

Impact of political and economic events

Source: S&P 500 - https://finance.yahoo.com/q/hp?s=%5EGSPC+Historical+PricesFor financial professional use only. Not for public distribution.

Please refer to the last slide for important disclosures and information.

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Employment instability


U.S. 10-year unemployment rate

• 20 to 24 years:

1,501,000

• 25 to 35 years:

1,905,0006

7

8

9

10

11

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Source: U.S. Bureau of Labor Statistics, 2016. Y axis in thousands

For financial professional use only. Not for public distribution.


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20164

5

Impact of technology



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Anything is possible



Perception is important



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So what has this created?


Understanding millennials


• Question - How many phone numbers can you remember?

• They are excellent at researching data because that is the world they


data because that is the world they grew up in.


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Understanding millennials

F il i t d


Values and purpose

• Family-orientedo Choose to live close to home — or at home

o 30% live at home (compared to 22% in 1980)

• Value work-life balanceo Much less likely to marry as compared to prior cohorts

M i li d t h i t


• More inclined to purchase experiences over assetso 36% are homeowners (lowest level for <35 age since started recording)

Source: Census Bureau and The White House Council of Economic Advisors, 2014





Source: Pew Research Center, General Social Survey data, 1987-2012


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Whom do they trust for advice?


Source: UBS Investor Watch, Think You Know the Next Generation Of Investors? Think Again., 2014


Moneyllennial


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Millennial investment breakdown


52%

28%

23%

46%

20%

30%

40%

50%

60%

0%

10%

Cash Stocks

Millennials Non-Millennials

Source: UBS Wealth Management, 2014


Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P.

Neither Delaware Investments nor its affiliates noted in this document are authorized deposit-taking institutions for thepurposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not representdeposits or other liabilities of Macquarie Bank Limited (MBL). MBL does not guarantee or otherwise provide assurancein respect of the obligations of these entities, unless noted otherwise.

PRE-MILLENNIALS 1215 (15657) © 2016 Delaware Management Holdings, Inc.

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f f f

Risk aversion


• Preference for financial guarantees

• Fear around Social Security stability

• Likely to support aging parent

Average Age Began Saving

Millennials 22

Gen X 27

Baby Boomers 35

• Led to earlier savings


Source: U.S. Chamber of Commerce Foundation, 2012 and Transamerican Center for Retirement Studies, 2014

Why do you care?


Millennials currently represent a little over

14.9 millionmillennials

U S h h ld

15%of those with net

worth in excess of

Estimated

$30 to 40

1/3rd of the U.S. workforce.By 2025 they will represent 44% of the workforce.

Almost

1 in 3tU.S. households

have annual incomes exceeding

$100,000

$2 million

milliontransferring to next

generation

entrepreneurs are between the ages of

20 and 35

Source: Department of LaborSource: Ipsos Mendelsohn Affluent Survey, 2014Source: Annual Survey of Affluence and Wealth in America, American Express Publishing and Harrison Group, 2012


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Current clients

10yrs• Average age of clients is rising by six to seven months a year, faster than the

overall population of North America.

• Aging clients means less savings, more consumption, and reduced AUM

10yrs older than average Financial AdvisorAverage client is

70+ Al t 1/4th f li t 70

Source: The State of Retail Wealth Management, PriceMetrix, 2015Source: Want to Foster Growth? Study Client Demographics, FinancialPlanning, 2016


70+ Almost 1/4th of clients are age 70 or older and hold approximately 25% of firm assets.

Start with your current clients

What can you do?


y

• Attach your brand to something they are excited about.


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M ltiple offerings al e proposition is e ol ing be ond prod ct to incl de

Importance of advice

• Multiple offerings--value proposition is evolving beyond product to include investment management and holistic planning

• Education and co-creation Environment

Nearly two-thirds of Millionaire Millennials enjoy investing and would not want to give it up64%

of Gen Xers, and just over half of Baby Boomers and members of the World War II generation respond similarly.

• Planning around technology

Source: The State of Retail Wealth Management, PriceMetrix, 2015


55%

Millennials are more likely than other generations to become critical i l f i fl

Embrace Technology


circles of influence.

Easy access• Website

o Mobile friendly

• Social Media

• Interactive contentInteractive content


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Innovative interactionMillennials love innovative ideas that allow shared learning, social interaction and on demand information


interaction, and on-demand information.

All third-party marks are property of their respective owners. This is not an endorsement of any online investing service. Delaware Investments does not have a relationship with any online investing service.


Communicate

Allow for informal communication channels


85%of clients willing toAllow for informal communication channels

• Let your website answer questions

• Texting/FaceTime/WebEx

Be a teacher rather than a preacher• Millennial clients don’t want to be talked down to or treated like children

of clients willing to use technology-enables media

43%of advisors felt same

way

• Millennial clients don t want to be talked down to or treated like children

• Statistics aren’t likely to create action

• Use emotive stories and visual narratives


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Focus On The Now

Intertemporal choice – give now focused actions to solve


p gfuture problems.

• Spend time assessing where they are rather than exclusively focusing

on the future

Segmented planning is likely needed• Cash flow management

I t t t• Investment management

• Employee benefits

• Goal development

• Budgeting


Service models


Offload transactional processes to the client

• Allow client to enter themselves into your CRM

• Co-creation of a plan

• Create brand interaction

Biggest competition is the robo advisorBiggest competition is the robo-advisor

• Leverage to aggregate, provide passive management

• Changes should benefit all generations, not just Millennials


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Service model

Hire a Millennial


Hire a Millennial• Match a junior advisor with a senior to grow current business

• Together create a marketing plan for the next generationo Invest lower cost asset in long-term Millennial relationship

We understand diversification, but oftentimes don’t follow that model with our human capital.

Create internal succession and higher business valuation with stratified book of business



Young advisor adds growth

There is value in adding nextgen Advisors to a team

10%

15%

20%

25%

Median Asset Growth

Median Revenue Growth

Source: The Fountain of Growth: Demographics and Wealth Management, PriceMetrix, February 2015


0%

5%

30 40 50 60

Advisor Age

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Young advisor adds synergy

• Firms that employed a nextgen advisor grew by almost double the rate of firms that did not between 2012 and 2014

• Having at least one nextgen advisor on your team causes higher income per owner

Source: The Rise of the NextGen Adviser, TD Ameritrade Institutional, 2015


Business model


Teams Based

Approach

Of

Succession

Plan

Finding• Prospecting and leveraging external relationships

Binding

• Managing onboarding of clients and helping to follow through/close business

Grinding

• Plan writing, managing business development initiatives, ongoing services

Grindingg g

Source: Adapted from The New Challenge for the Next Generation of Financial Planners, ThinkAdvisor, 2014


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Undergraduate programs



Graduate programs



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Graduate programs

Financial planning students have courses in:


Financial planning students have courses in:

• Fundamental of Financial Planning

• Investment Planning

• Tax Planning

• Retirement Planning

• Estate Planning

• Life Insurance Planning

• Sales and Marketing

• Entrepreneurship

• Philanthropy/Planned Giving

• Counseling

• Life Insurance Planning

• Plan Presentation and Design


Technology Partnership


All third-party marks are property of their respective owners. This is not an endorsement of any vendor. Delaware Investments does not have a relationship with any vendor.


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References1. Millennials: Breaking the Myth, Neilsen 2014. http://www.nielsen.com/us/en/insights/reports/2014/millennials-breaking-the-myths htmlmyths.html

2. 15 Economic Facts About Millennials, Whitehouse Council of Economic Advisor, 2014. https://www.whitehouse.gov/sites/default/files/docs/millennials_report.pdf

3. CPS/HVS, 2014 http://www.census.gov/housing/hvs/data/histtabs.html

4. Young Adults: Then and Now, Census Bureau, 2014. http://www.census.gov/censusexplorer/censusexplorer-youngadults.html

5. Unites States Youth Unemployment Rate 1955 – 2015, Trade Economics, 2015. http://www.tradingeconomics.com/united-states/youth-unemployment-rate

6. Millennials Less Trusting of Others”, Pew Research Center, 2014. http://www.pewsocialtrends.org/2014/03/07/millennials-in-adulthood/sdt-next-america-03-07-2014-0-05/

7. Think You Know the Next Gen Investor? Think again.” UBS, 2014. http://www.ubs.com/content/dam/WealthManagementAmericas/documents/investor-watch-1Q2014-report.pdf

8. Better Money Habits Millennial Report, Bank of America/USA Today, 2014 http://about.bankofamerica.com/assets/pdf/bmh-millennial-report.pdf


References

9. Class of 2015 Has the Most Student Loan Debt In U.S. History, Market Watch, 2015. http://www.marketwatch.com/story/class-of-2015-has-the-most-student-debt-in-us-history-2015-05-08

10. The Millennial Generation Research Review, U.S. Chamber of Commerce Foundation, 2012. http://www.uschamberfoundation.org/millennial-generation-research-review

11. 15 Facts About Millennials’ Retirement Readiness…and 7 Steps For Long-Term Success, Transamerican Center for Retirement Studies, 2014. http://www.transamericacenter.org/docs/default-source/resources/center-research/tcrs2014_factsheet_millennials.pdf

12. Millennials: Confident. Connected. Open to Change., Pew Research Center, 2010. http://www.pewsocialtrends.org/2010/02/24/millennials-confident-connected-open-to-change/

13. Next Generation Strategies for Advertising to Millennials, comScore, 2012. http://www.comscore.com/Insights/Press-Releases/2012/1/comScore-Releases-Report-Next-Generation-Strategies-for-Advertising-to-Millennials

14 The New Challenge for the Next Generation of Financial Planners, ThinkAdvisor, 2014 http://www.thinkadvisor.com/2014/04/15/the-new-challenge-for-the-next-generation-of-finan?page=3


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Contact information

Delaware Investments

This presentation is for financial professional use only.

Please consult your compliance departments before accessing any social media networks for a business purpose.

The presentation is for illustrative purposes only and is not an endorsement of any app, service, or publicly traded company.

This presentation is not a recommendation to buy or sell a particular security.

2005 Market StreetPhiladelphia, PA 19103-7094

Individual investors:800 523-1918

Advisors:877 693-3546

For more information about

The views expressed are those of Dr. Harness and do not necessarily reflect those of Delaware Investments or any of its employees.

Dr. Harness agrees to hold Delaware Investments harmless from any claims of intellectual property rights infringement that may arise out of Delaware Investments’ use of the foregoing materials.

Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries.

Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.

Neither Delaware Investments nor its affiliates noted in this document are authorized deposit-taking institutions for the purposes of the Banking Act 1959 For more information about

Delaware Investments visit delawareinvestments.com

p g p p g(Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited (MBL). MBL does not guarantee or otherwise provide assurance in the respect of the obligations of these entities, unless noted otherwise.

(15657) 12/2015

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