Hipsters on board

It’s increasingly clear, however, that the largest generation in history – the baby boomers, born between 1947 and 1966 – is coming to accept that it has a lot to learn from what may be the fastest-moving generation in history. Says Giselle Kovary, co-founder and managing partner with Toronto-based n-gen People Performance Inc., a company that provides intergenerational workplace training to financial advisory firms: “Gen Y is an extremely innovative cohort, and they’re constantly looking for ways they can creatively package, position or market their products and solutions in order to meet their clients’ needs.”

According to Statistics Canada, there are now about eight million people in Canada who were born between 1980 and 1995, known as Gen Y or the “echo boom,” because most are the children of baby boomers. Fresh-faced Gen Yers are getting ready to take over from the 10 million or so greying boomers but are not prepared to spend much time in the mailroom or fetching coffee while they learn from their elders.

Boomers, for their part, are learning to live with that fast-track mentality – but not without some bumps along the way. Says Angela Barham, a former sales manager with Sun Life Financial (Canada) Inc. who has coached and counselled advisors: “A lot of the senior advisors don’t really mix with the junior advisors. [Financial services is] an industry that’s different from the average workplace. Ours can get pretty segregated.”

That segregation can be detrimental to a company’s image, especially if a disgruntled Gen Y employee decides to spread the word, warns Kovary: “If Gen Yers think it’s a great place to work, they’re going to tell the 700 people on their Facebook and Twitter pages. If they have a bad experience? Same result. Understanding the perception of your Gen Yers in the workplace and marketplace is critical, because you won’t attract people if [you have] a bad reputation in the industry.”

With the benefits and risks of working with Gen Y in mind, below are some pointers from advisors in both camps who have successfully navigated the shoals of the intergenerational waters.

– PLAY TO EACH OTHERS’ STRENGTHS

Eric Mennell and James Ward are portfolio managers and brokers at Macquarie Private Wealth Inc. in Toronto. Mennell, 49, provides market insight and client networking; Ward, 25, performs the research and trading duties.

The two met at another firm four years ago, when Ward approached Mennell about working together, using their mutual interest in technology as a bridge. That approach singled out Ward in Mennell’s mind as a person with potential. “Twenty-one years old,” Mennell recalls, “and he comes up to me asking for help on a project, knowing we were from competitive teams. You don’t teach that.”

Ward, for his part, saw that Mennell would be a willing partner in working to develop a more sophisticated technical approach to separately managed accounts. “What really drew me,” Ward says, “was that [Mennell] wanted to build something that wasn’t there and could serve clients better. That led to the first piece of technology we created together.”

According to Michelle Dagnino, an independent expert and speaker on Gen Y engagement and youth culture in Toronto, software-related projects intrigue younger advisors. And, as in Ward’s case, software connects them with their senior counterparts.

“The expertise in technology will come more and more from Generation Y,” Dagnino says. “They grew up with the intuitive sense that technology is a form of language.”

Kovary believes Gen Yers will take this skill further, using it for both prospecting and showing older advisors how to use the increasingly crucial tool of social media.

“Gen Yers will show [boomers] different ways to connect with the younger client base,” Kovary says. “Not by golfing or mailing letters, but by using Twitter and Facebook and getting into a LinkedIn group.”

Brian Hein, 53, an advisor with Assante Wealth Management Ltd., noticed what Gen Yers bring to the table when he hired Matt Aubrey for his Calgary practice seven years ago, when Aubrey was 23.

“[Gen Yers] definitely have technology skills,” Hein says, “and they’re way better on marketing, stronger on the research. They bring in great ideas; they bring enthusiasm; they bring energy to the office.”

For example, Aubrey uses technology to stage “interactive” meetings with clients. He uses a TV monitor hooked up to a computer to show clients their financial plans. He also conducts meetings with clients using a webcam service such as Skype.

This kind of initiative was what Bob Ainsworth, an advisor with Sun Life in Calgary, had in mind when he hired Bill Reinkens eight years ago, when Ainsworth was 51 and Reinkens was 26.

“One of the things I wished I could do more of was make better use of the database tools and develop business plans and marketing strategies,” Ainsworth says. Reinkens’ skills in these areas, Ainsworth adds, have contributed significantly to the expansion of his practice.

For example, Reinkens has added filters to the client database, creating the ability to sort clients by age, among other characteristics. Reinkens also has introduced stylistic changes to client communications.

“We rewrote birthday emails so the message was a little less salesy and more businesslike,” Reinkens says. “We changed it to say, ‘Make sure you have an updated financial plan – come in and see us’ as opposed to ‘Hey, we have this new product!'”

At the same time, a Gen Yer can benefit from an older advisor’s industry experience. In Ward’s case, no matter how much time he spent researching a company’s business plan, he would ultimately rely on Mennell’s knowledge of the company’s management history and other details – knowledge that comes with long experience in a sector.

“I think what comes from [Mennell’s] quarter-century of experience is knowledge of people,” Ward says. “[Mennell] has a huge network, and can give a lot of input that I simply don’t have access to.”

– ADAPT TO WORK STYLES

Although it may seem to be a relatively minor detail, seating arrangements can help with the learning experience. Mennell and Ward work in close proximity to each other, with their desks arranged so that they are back to back, only a few feet apart. That means that they can hear everything the other says.

The seating arrangement was Mennell’s idea. He once shared an office with an older advisor for two years when he himself was just starting out.

“I learned an enormous amount,” Mennell recalls, “in terms of how client communication works. And he heard everything I said. So, there was a lot of training on the fly.”

Occasionally, Ward has to use earplugs while Mennell is on the phone. However, Ward applauds the arrangement: “It does allow us to quickly adapt or react when something new comes out.”

Other issues can arise when someone is being closely supervised. Executives have expressed concerns to Kovary about younger employees spending time on Facebook. Flexibility, she says, is required on both sides. Gen Yers see nothing wrong with letting their personal lives overlap with their workdays.

“Often,” Kovary says, “the response from Gen Y is ‘What difference is it that I check my Facebook when baby boomers check their stock prices or golf scores all the time?'”

It’s part of a trend to a looser workplace structure, Kovary says. Gen Yers expect more fluidity in their day than boomers may find appropriate. For Gen Y, results, not hours, tell the tale.

“They can be very concerned with time off and flexible hours,” says Barham. “[But] in this industry, executives are very regimented about how they want things done, and juniors feel those restraints. The result is that Gen Yers will try to buck those rules.”

– RESPECT BOUNDARIES

When it comes to office etiquette, Kovary says, Gen Y’s more relaxed and sometimes more direct approach can cause friction with boomer bosses.

“Senior leaders are surprised and sometimes offended when a Gen Y employee just skips the process and talks right to them,” Kovary says. This is where an older advisor can deploy his or her industry experience to explain the rules, she adds: “Sometimes, Gen Yers, in their eagerness to be creative and innovative and add value, don’t take the time to understand why things are done in a traditional way.”

Many members of the younger generation have little experience with consequences, Dagnino adds, and they may need specific guidance on rules that might seem self-evident to boomers.

Of course, a fresh approach can bring its own energy and ideas for useful change. Industry veterans need to keep in mind, for example, that they should not be micromanaging a younger colleague’s day.

On the other hand, recruits are beginning to appreciate the value of having the inside track when they work with an experienced guide. “What’s been pivotal to my success, first and foremost,” Aubrey says, “is having that mentor relationship. [I could] see what Brian was doing with his clients, and could pick his brain on the more challenging cases.”

Mennell, for his part, has come to appreciate Ward’s feedback, even if it means the occasional heated debate. “[Ward] will challenge my assumptions,” Mennell says. “But that provides a different lens for us to look at, and that’s been a big benefit. If there wasn’t friction, there wouldn’t be challenged assumptions.”

The other payoff, for both participants, is the gradual maturing of the relationship into one that is closer to that of equals.

“The mentor relationship has evolved to a very large degree into a collegial one,” Ainsworth says. “I respect where [Reinkens] is now, and we bounce the more complex ideas and strategies off each other.”

Reinkens takes some pride in his contributions despite his youth: “I think it was just changing Bob’s habits to some degree. [For instance,] sorting out the [client database] system.”

– SUCCESSION PLANNING

Ainsworth’s first step toward a succession plan was to transfer his younger clients to Reinkens – a strategy that Kovary endorses. She believes many Gen Y advisors prefer the kind of informal communication – such as texting or emailing – that younger clients also are more comfortable using.

“Gen Y clients don’t want a phone call three days later,” Kovary says. “They expect that their emails will be responded to within a day, if not an hour. [Gen Y advisors] can provide better response time because they will text their clients [right] back. It’s an informality that older advisors can be uncomfortable with.”

When it comes to Ainsworth’s older clients, he uses a different approach: Reinkens sits in during annual reviews with them. Later in the process, Ainsworth will introduce Reinkens as the advisor who will be taking over that client’s account in the future, after Ainsworth has reduced his hours or retired.

Hein’s succession plan includes Aubrey, who was hired as an assistant and eventually obtained his mutual fund licence and certified financial planner designation. At that point, Aubrey began accompanying Hein to client meetings and gradually taking on some of those clients as his own.

“There were a couple of years of not making much money and doing work that wasn’t quite as fun compared with working directly with clients,” admits Aubrey. “But to have that transitional period and ultimately be able to take the lead on a client is huge.”

– OFFER FINANCIAL MOTIVATION

And, finally, you must have a clear plan to ensure that younger recruits are compensated fairly. You also must be clear about how the junior advisor’s compensation will rise at various stages in the handover process.

Hein, for example, prefers to recruit Gen Yers without advisory experience, starting them as office assistants. He pays the recruit a modest salary and introduces him or her to clients as their day-to-day contact for non-advisory matters.

If all goes well, within the next two to three years, Hein will pay for the courses necessary for the junior advisor’s licence requirements. Once the junior advisor is licenced, Hein will start opening up his book of business to the recruit, offering the opportunity to earn commissions.

Hein refers to the commission-sharing arrangement he uses as “joint code.” In that arrangement, the younger advisor takes on a group of clients with smaller accounts, sharing the commissions with Hein. (The younger advisor takes the lion’s share.) As commissions increase, the junior advisors’s salary is reduced by the same amount. Hein ensures that there’s enough client activity to maintain compensation for the junior.

“I think it’s our obligation as senior advisors in this industry to plant some trees and get some younger people in,” Hein says. “As you get older, you need to take more time off. Your compensation may drop for a month or two, but then you’re focusing on other important client relationships and that takes over.”

But direct compensation isn’t everything. Firms and senior advisors also need to assure Gen Yers that their innovative thinking and fresh approach to work are welcome.

Says Dagnino: “A lot of boomers talk about it in terms of the Gen Yers not wanting to put their time in. But I see it differently. Gen Yers are very ambitious. I think they are willing to put their time in, but it has to be in such a way that the goal sounds reachable.”

© 2012 Investment Executive. All rights reserved.