Millennials – young people who reached adulthood around the year 2000 – are the highest educated generation in history. They are also leaving college with a lot of debt and have graduated into a tough job market.
According to Gary Weuve, vice president of the Center for Advisor Excellence™, CUNA Brokerage Services, Inc, as the economy begins to improve, this is going to change – and this change means opportunity for credit unions.
In a special breakout session at the World Credit Union Conference in Denver, he told delegates how the largest transfer of wealth would occur between baby boomers (those born post WWII) and millennials (or generation Y), totalling more than $30tn.
As the medium earning for full-time workers has gone down, millennials are many times underemployed and their diplomas don’t match the jobs they are actually doing. Others are unemployed or living with parents, delaying the purchase of a home.
“They are going to wait until they are financially stable enough to marry and start a family,” explained Mr Weuve. “They are going to look at success much differently.”
When asked how they define success, 67% of millennials say that getting to the top of their profession was important, but only 3% of these had that in the top three.
“While they said it was important to make lots of money … they want to make a difference. That means that now, when marketing services and positioning themselves, credit unions need to focus on their missions and on the community work that they do,” said Mr Weuve.
He also tried to address some myths about millennials, saying that while they are sometimes perceived as entitled, flaky, computer savvy and disloyal, they should rather be seen as collaborative, confident, connected and open to change.
“They will test out jobs until they find out one that they really like and find the type of organisation that they want to work for. Flexible hours might be a way to attract them. Engage your millennial employees in helping you market out to them. Ask their opinion. Tap into some of that smartness and engage them in helping you build a marketing and awareness plan that will touch others out there,” he told delegates.
In a recent study by the Credit Union National Association, 74% of non-members between 18-24 have some or no knowledge of credit unions. However, according to CUNA Mutual Group, those in generation Y who are members do trust credit unions as a source of financial advice.
Millennials are also in the early stages of their investment and savings career and don’t have a lot of money, which means that financial advisers have to increase fees to justify working with them.
“They need the advice just as badly, and they want the advice. We need to think of different ways to charge for our services – whether it’s via monthly models or hourly fee models,” added Mr Weuve. “As baby boomers retire, you’ll be losing fees. Your advisers need to build a direct relationship with the heirs so that the next generation understand the value that financial advisers provided to their parents, and help them grow their assets.”
For credit unions, the challenge will be to develop a value proposition that is understood by the next generation. The opportunities are huge, said Mr Weuve.
“Millennials are going to shape the economy over the next 30 years and if you can figure that out, loads of organisations will be knocking on your door.
“Millennials now make up the largest segment of buyers – 32% of the US housing market. It’s coming, its starting to happen. They are entering adulthood and that’s good news for credit unions going forward because lending is a big part of your business. They are also willing to invest.
“Insurance needs are going to increase as well. Thirty million people have said they know they need life insurance and 44% of those are more likely to buy than any other generation. They don’t realise, many of them, that they can buy this at their banks, that they can buy insurance through their credit union. Credit unions have a great opportunity in being able to provide financial education for this generation, and provide guidance and advice.”
Mr Weuve thinks credit unions are best positioned to provide these services for millennials.
“The biggest difference you have is the fact that you are a credit union. Nobody is going to serve them better than you. You need to build relationships with the entire family and once you refine that, expand the relationship with attorneys specialising in different sectors,” he said.