My posts are primarily centered on how the financial services industry can increase their share of each generation’s business and that includes Millennials.
This post is different because recently a recruiter for a life insurance company recently asked me what he can do to attract Millennials to embrace financial advisory as a career choice. Quite honestly, and in my opinion, this is a conundrum for the life insurance and financial services industry.
The starting point to begin to answer this question is the same whether an organization is seeking Millennials as clients or as financial advisors. We need to understand the events that have impacted their lives and how those events have formed their worldview.
In a previous post I talk extensively about two major events that have had a profound effect on Millennials — The Great Recession and Student Debt.
One result of The Great Recession is that Millennials don’t trust the financial services industry. An article in Huffington Post confirms this view, “Millennials are a skeptical bunch in general, but no industry has felt their collective distrust as heavily as the financial services sector. In the aftermath of the Great Recession, movements such as Occupy Wall Street and Bank Transfer Day made it clear generation Y (Millennials) has little faith in the people who manage our nation’s money”. So it begs the question — Why would they embrace a career in an industry they don’t trust?
An article in Efinancialcareers highlights the decline of the younger generation entering the financial services sector “While real wages for financial services professionals in New York rose by 14%, the number of young people working in the financial sector has declined by 11,000, according to the New York City Comptroller”.
The article interviewed a Millennial who had this to say about the financial services industry, “Finance is a bunch of old white guys doing sneaky things in a conference room. I graduated from high school in 2008 when the market crash was happening, and I recently saw The Big Short, which explained the process of what went into the crash. That makes me reluctant to deal with large financial institutions other than what is absolutely necessary. I recently bought a car, but I didn’t want to deal with lease terms or loans, so I decided to pay for it outright. I’d rather eat peanut butter and jelly than deal with the financial stuff”. All I can say is “Yikes”!
An article in Forbes corroborates this young woman’s attitude “The financial collapse has unquestionably tarnished the reputation of the industry. Millennials have especially questioned the industry because they became adults during the time of the financial crisis, bank failures and the foreclosure boom. As a result, 21% of millennials have decided to avoid the financial services sector”.
As my recent article in Huffington Post says “Student Debt is a fact of life for the “most educated generation” in our history. This generation is bowed down with enormous student debt which will take years for many of them to pay off”. Further, the average student loan debt for the Class of 2016 is nearly $37,172 according to Student Loan Debt Hero. For most federal student loans, the graduate must start making payments six months after leaving school. If you assume a loan interest rate of 6.80% for a loan period of 10 years the average monthly payment on a loan of $37,172 is approximately $427.78 — for a recent graduate that’s clearly a lot of money each month to shoulder considering that they have other living expenses too.
On the other hand, private lenders are different and each lender’s terms are different. Most lenders generally start sending bills right away. Some allow the student to wait until they have finished school. The bottom line is that shortly after the cap and gown comes off they need to start paying back their student loans — and they need the income to be able to do that. They need adequate compensation immediately and can’t rely on a career that is commission based and will take time to show meaningful returns.
A Forbes article points out “Relative to all other industries, money matters in the financial industry, even to millennials who usually prioritize meaningful work over more money. 38% say that the starting salary was a key factor in accepting their job and 44% rated cash bonuses as an important benefit (compared to 36% across all industries). In another study by Kelly Services, they also found that more millennials are looking at money compared to all other industries (23% versus 20%). This shouldn’t be a surprise to most but it’s still important to note that money drives millennials (and older generations) because of the nature of the industry”.
And it’s not just the branding and compensation that is at issue it is the method we use to engage and attract clients. Millennials are digital natives — they have never known a world without the internet — and they want a more “connected” experience. An article in Forbes confirms this view “Millennials want a more connected experience and want to work in an environment where they can freely use their mobile phones and social networks. Cisco reports that millennials won’t work at a company that blocks these tools or doesn’t let them choose between mobile devices. The financial services industry is regulated and is strict on what employees can access at the office but will eventually have to open up or risk losing top millennial talent”.
Millennials are one of the most racially diverse generations. An article in Brookings says “Racial diversity will be the most defining and impactful characteristic of the millennial generation. Newly released 2015 Census data points to millennials’ role in transitioning America to the “majority minority” nation it is becoming”. And if financial services want to attract Millennials to enter the financial services industry we, as an industry sector, will need to make diversity a business imperative. Dan Schawbel’s article in Forbes confirms this view “There is now more pressure on financial companies to embrace diversity in the workplace. 68% of millennials said that while companies talk about diversity, they felt that opportunities weren’t equal for all. While African-Americans make up almost 14% of the U.S. population, their share of senior positions in the financial services industry remains under 3%. If the industry wants to stay relevant, innovative and progressive, they are going to have to start recruiting people from a variety of backgrounds”.
Admittedly this is a complex issue and one that has a number of “moving parts” and I have touched upon only a few concerns in this post — there are others that need to be addressed like training and mentoring and I will address those issues in future posts.
I would appreciate and look forward to your ideas and comments on this important subject.
Originally published at www.nancysalamone.com on October 14, 2016.
