Fundamental for managers to groom Gen-Y
Sweeping demographic change will force the funds management (FM) industry to look beyond the ‘baby boomers’ at today’s Gen-Y as wealth accumulators.
By Bhanu Pande, TNN |
NEW DELHI: Sweeping demographic change will force the funds management (FM) industry to look beyond the ‘baby boomers’ at today’s Gen-Y as wealth accumulators. Beyond the Baby Boomers: The Rise of GenerationY — a new KPMG International study argues that FM industry is unaware and unprepared for generational shift affecting their customer base and their employees. The global survey, which shows an industry complacent about its future, points that the shift is going to be equally profound for the Indian market.
The study notes that wealth accumulation over the last 20 years has been supported by the ageing of baby boomers born over the 15 years to 1961. However, many in the FM industry intend to remain focused on the baby boomers regardless of next decade’s demographic trends. The emerging trends reflect that the number of people pushing into the ‘wealth accumulation’ stage of the life cycle (aged 40-59 years) will begin to shrink in the US from 2013 onwards.
Interestingly, only 28% of surveyed FM firms intend to develop a relationship with Gen-Y as customers over the next five years. They will join the 22% others, who have been focusing on Gen-Y as customers, over the last two years. However, this still indicates that only half the FM industry is focusing on this key market constituency. “The FM industry has been catapulted forward on a rising demographic tide that is now receding” says KPMG partner in Australia and author of the report Bernard Salt. “Over the next five years, the number of people pushing into ‘wealth accumulation’ will turn negative.
The industry must take stock, examine its position, and recaliberate its trajectory to align with the rise of Gen-Y as wealth creators and wealth inheritors, if it wants to continue to grow and prosper.”
According to Russell Parera, CEO, KPMG India, the findings hold water for India as well, probably, more so since India’s demographic profile over the next 15 years, will have a larger number of people getting into employable age.
“The BPO sector which has a high proportion of Gen-Y is witness to the characteristics in the report with reference to employees,” he said. “We increasingly see the financial sector targeting Gen-Y to build that affinity with the ever-expanding population segment that shows rising disposable income and a desire to be more forward looking.”
The study finds that the industry is agreed on what Gen-Y wants – the dominant answers are, mutual funds and equities. However, the industry is divided on how to engage or approach them. “This is an industry that knows its products far better than it knows its future customers, or how to engage them.”
Only two percent of survey respondents thought self-managed products would be attractive to the Gen-Y. However the focus groups in all cities reinforced the point that Generation Y “want to look at their portfolio every day”. The study covered the FM industry participants from 17 countries representing businesses that account for 20% ($3,800 billion) of global funds under management.
The study notes that wealth accumulation over the last 20 years has been supported by the ageing of baby boomers born over the 15 years to 1961. However, many in the FM industry intend to remain focused on the baby boomers regardless of next decade’s demographic trends. The emerging trends reflect that the number of people pushing into the ‘wealth accumulation’ stage of the life cycle (aged 40-59 years) will begin to shrink in the US from 2013 onwards.
Interestingly, only 28% of surveyed FM firms intend to develop a relationship with Gen-Y as customers over the next five years. They will join the 22% others, who have been focusing on Gen-Y as customers, over the last two years. However, this still indicates that only half the FM industry is focusing on this key market constituency. “The FM industry has been catapulted forward on a rising demographic tide that is now receding” says KPMG partner in Australia and author of the report Bernard Salt. “Over the next five years, the number of people pushing into ‘wealth accumulation’ will turn negative.
The industry must take stock, examine its position, and recaliberate its trajectory to align with the rise of Gen-Y as wealth creators and wealth inheritors, if it wants to continue to grow and prosper.”
According to Russell Parera, CEO, KPMG India, the findings hold water for India as well, probably, more so since India’s demographic profile over the next 15 years, will have a larger number of people getting into employable age.
“The BPO sector which has a high proportion of Gen-Y is witness to the characteristics in the report with reference to employees,” he said. “We increasingly see the financial sector targeting Gen-Y to build that affinity with the ever-expanding population segment that shows rising disposable income and a desire to be more forward looking.”
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The study finds that the industry is agreed on what Gen-Y wants – the dominant answers are, mutual funds and equities. However, the industry is divided on how to engage or approach them. “This is an industry that knows its products far better than it knows its future customers, or how to engage them.”
Only two percent of survey respondents thought self-managed products would be attractive to the Gen-Y. However the focus groups in all cities reinforced the point that Generation Y “want to look at their portfolio every day”. The study covered the FM industry participants from 17 countries representing businesses that account for 20% ($3,800 billion) of global funds under management.
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