Why Advisors are Getting the Gen Y Pink Slip
The insurance industry remains befuddled by Gen Y, more specifically those born after 1980. Carriers are trying to figure out when and how to build products for them. Intermediaries are trying to capture them on social media. Advisors are trying to figure out how to keep them as clients after their parents die.
Finding and attracting youth to this industry has become tougher. We’ve been blaming the economy, the inability to reach the middle market profitably and a host of other things for why this is true. But are these problems, or are they symptoms of a bigger issue?
After examining this for years and hearing opinions from people who are outside of the industry, it is very possible that the life insurance industry is losing relevance to the newer generations. Irrelevance sounds strong. However, we must recognize that irrelevance is a perception, and perception is reality, and reality impacts business. There are three main drivers and all present opportunity for those willing to explore new ways of thinking.
• Death isn’t what it used to be. Back in the days when life insurance sales were good and more families had coverage than they do today, death was a top-of-mind risk. Disease, workplace hazards, even wars brought to mind the impacts of the loss of the family’s breadwinner. Today, we have far greater workplace safety standards. People are living much longer due to medical technology advances, and the financial impacts have been severely lessened when you consider the growth in households with two working spouses. This is social progress. Some would consider it a threat.
• They don’t understand us. The language of insurance has not changed much at all over centuries. Maddock Douglas’s 2010 study reveals that Gen Y does not relate to our language. For example, the word “retirement” is a positive word for boomers. It means freedom. Gen Y sees it as something to do with old people. They don’t see the cessation of work as part of their future.
• Younger consumers are driving a trend that Wikinomics calls prosumerism. A prosumer is a mash-up of professional and consumer. Examples include YouTube, where you can be your own movie star, and Shutterfly, where you can create your own photography studio. Prosumers want to engage and create custom experiences. They can’t do that with insurance products. A Gen Y CEO of a new company indicated that life insurance is the only product that she’s forced to buy in a way that she cannot control. People like her feel the process is outdated.
let’s examine how the problem manifests for the advisor
Boy meets girl. Boy advises girl. Boy fails to stay relevant to girl’s children. Girl dies. Children take the money and run. If Gen Y sees our industry as irrelevant, then when the time comes for them to manage their own or inherited wealth, they will resort to means that are the most familiar to them.
Where do they turn to for advice?
Gen Ys turn to parents for some advice, but will go to their friends and co-workers most. They even turn to their employer’s HR director to determine what 401k choices they make.
What are their aspirations?
Gen Y wants to do many things with their money. They are a charitable, cause-driven and social generation. They are full of ideas to make the world a better place. This sounds like a good job for the financial and insurance industry to be involved
innovation is a solution
While the word innovation conjures up many different definitions in people’s minds, in our business we are required to define innovation in a specific way, so that it is applied correctly. Innovation is when a consumer insight drives an idea, and then the idea is executed well and you make money from it. An idea without insight is just an invention. For example, the Iridium phone by Motorola was a multibillion-dollar invention to allow people to communicate from the most deserted parts of the world, and relevant to a very small number of people. Time magazine considers it one of the top 10 biggest tech failures of the last decade. The insurance industry has many such failures, but they have not gone on record in the business journals. Insight unearths tension that is unresolved. When it is resolved, opportunity is abundant. We define insight in a form that looks like this: I [statement of fact] because [reason] but, [tension].
Gen Y insights might include the following:
• “I believe getting financial advice is important because I don’t want to risk losing the money I’ve saved, but I am afraid that advisors are just trying to sell me something.”
• “I would like to be covered for risks because I care about my family’s future, but I find it is confusing and boring to think about.”
• “I want advice I can trust because I care about my future, but I don’t really know who to turn to.”
• “I want to plan for my future because I have big aspirations, but I am more worried about risks to my career success than to my health/life.”
Some of the tensions may make industry professionals uncomfortable, but the most forward-thinking people use it to invent the future. What are some of the things that you can do to invent the future using the new consumer insights?
• Be present in your client’s kids’ lives. I don’t mean attending their weddings, sending them birthday cards or trying to sell them anything on Facebook. Figure out how to be found by them. The prosumer is out there looking and forming opinions anyway. If you find your specific area of expertise on a subject they really care about, they will find you.
• Stop word pollution. Consider the words, phrases, tonality and form of your communication. Does it sound like a conversation or a dissertation? Is it really long and linear, or is the information chunked into digestible pieces? Could visuals and videos help bring your points to life? Younger consumers don’t read the same way we used to. It is not because they are illiterate; it is just survival in an information overloaded world.
• Get Gen Y practice. Find places where you can serve Gen Y. My best friend is one of those HR directors that young employees turn to. She is well aware of the liability she is taking on by giving 401(k) asset allocation advice and
wants to be relieved of it. Can you find a few smaller employers that might be open to having you come in and assist their employees with choices? Even if you don’t make much money doing it, the Gen Y muscles you build will be valuable to your practice.
• Redefine the business you are in. If death/illness in not a top-of-mind risk, what is? Are there ways to partner with the insurance companies and financial institutions you work with to find the risks that young people care about today and help mitigate them? Can you broaden the definition of what you do for clients? Find ways to identify with potential Gen Y clients and meet them where they live rather than expecting them to come to you, and your potential for new, younger clients will increase exponentially.
by Maria Ferrante-Schepis for the Winter 2012 issue of The Wealth Channel Magazine. Maria Ferrante-Schepis is managing principal of Insurance and Financial Services at Maddock Douglas, Inc.