YES LIVE: “Plow the runway” for young would-be investors

One of the biggest challenges in serving “Generation Why” is overcoming young adults’ disinterest in delayed gratification. Kris Wickline, Gen Y consumer program manager for the CUNA Mutual Group, gave her YES Summit audience detailed advice for convincing 18-to-30s to address their need for long-term investing.

Not surprisingly, the top consumer generation is both optimistic and unrealistic about their futures. Eighty percent say getting rich is their most important or the second-most important goal. However, only 5% say they have concerns about achieving lifestyle of leisure.

Even though more than four 10 Gen Yers expect to have to support their parents in old age, today’s young adults are largely ignorant of economic realities. Two-thirds of seniors at four-year colleges will graduate with an average of $20,000 in debt. And as Anya Kamenetz points out in her book “Generation Debt,” 25-to-34-year olds are currently spending 16% more than they earn.

Fortunately, credit unions who act soon can seize significant investment market share. With some notable exceptions, says Wickline, the investment industry is mostly oblivious to the potential of the young adult market. Credit unions can move on this potential, according to Wickline, if they:

• Start with a focus on the short term. Young adults are unlikely to have emergency funds or solid plans to reach short-term financial goals. By helping them succeed with their immediate saving and investment concerns will give you the chance to follow up with wealth-building and retirement. Wickline calls this entry-level intervention as “plowing the runway” so that young adults can land in stormy economic times. Once safely on the ground with basic savings, they’ll be more receptive to your long-term wealth-building messages.

• Educate about debt and money management. Help young adults form an investment plan and execute plan. Don’t be shy about putting your investment products in front of young adults. Wickline says that you can “ask for the sale” without being perceived as using hard-sell tactics and generating resistance.

• Provide simple online investment options supported with solid information. Generation Yers are more likely to face many job changes than their parents. By the same token, they’re less likely to have the access to the same kinds of employer pension and retirement plans and support from Social Security than their elders. They need a range of products designed for them, with low entry and participation limits and easy management procedures.

Wickline cited models of successful approaches. Companies such as ING are online with “personal financial management” (PFM) tools that offer free online investment planning tools that draw 18-to-30s away from their competitors.

IMHO: The idea of building long-term wealth-building is nearly as difficult a subject to sell to young adults as the need for insurance. Anything you can do to extend a helping hand with long-term investing will give you a tremendous competitive advantage by establishing a long-term relationship with young members. You’ll reach Gen Y through online interaction, but you’ll need to back it up with friendly, reassuring face-to-face support.