Millennials, finance, and the future

Category: Asia, Global, Europe, U.S.A.
By Nick Pollard*

Demographic revolution reshaping the financial services industry

Millennials get a lot of ink and understandably so. When I researched what CFA Institute has been writing on this important demographic, it is predominantly focused on the 84 million US-based millennials.

Here in Asia, as is often the case, the scale of things is very different. There are an estimated 400 million millennials in China, more than the working population of both the US and Western Europe. In India, the approximately 410 million millennials account for one-third of the country’s population, with nearly 60% already chief wage earners of their overall household income. For investment and wealth managers, ‘compelling’ doesn’t seem to do these facts justice.

At CFA Institute, and for readers of Asia Asset Management, millennials present two tremendous opportunities: first, this cohort will soon enter the workforce or are about to enter their prime earning years and, second, they think about money differently. For them, purpose is tantamount both in how they earn money and how their wealth accumulates over time. These two factors offer tremendous opportunities for both employers and asset management professionals.

Shaping the future

Deloitte’s 2015 Mind the Gaps, a Millennial Survey revealed that technology, media and telecommunications (TMT) and finance are the top two sectors considered by recent university graduates to equip them with the skills businesses will most value in the next five-to-ten years.

Here in Asia Pacific, millennials’ increasing interest in finance is evident: the region is CFA Institute’s fastest growing, with CFA programme candidates in China and India leading the way. For the second year in a row, China outflanked the US for candidates sitting the June 2017 exam. For fiscal 2017, candidate growth in China was up 30% to more than 65,000, and India was up 19% to just over 23,600. Millennials not only dominate CFA programme candidates; 45% of Asia Pacific CFA Institute members are millennials.

In China, the government is also playing a role in developing millennial interest in financial services. Municipal government plans in Chengdu, Shenzhen, and Shanghai provide incentives to attract financial talent.

In May, I was invited by the Chengdu Financial Bureau to speak at its Global Innovation and Entrepreneurship Fair and provide advice on how the city could strengthen its position as a financial centre with an international influence. In addition to the benefit of a global financial credential for the cadre of financial talent joining the workforce in China, I spoke of the role that employers play in committing to high professional standards, and about innovation and building world-class capabilities.

The takeaway? Favourable employment prospects are regularly cited as a key reason for candidates’ interest in finance.

Retaining millennials

There are 26,000 members of CFA Institute in Asia Pacific, most in positions to provide us with greater understanding about millennials from an employers’ point of view. Richard McGillivray, the Hong Kong-based director of our Asia Pacific Institutional Partnership team, is a larger-than-life South African who works with some of the biggest banks and asset management firms in the region to develop programmes that attract and retain millennials.

His team worked with State Street’s Young Professional Network – many millennials – and taught them how to network. In a series of events, we took the fear and dread out of business networking and taught basic skills (like a firm handshake) and how to start a conversation (do your research about who will be there or the topic under discussion).

We complemented this with a small networking event that allowed them to practice these skills in a safe environment, and concluded with a larger scale event attended by mid- and senior-level professionals who work in finance in Hong Kong. We were fortunate to have members of The Hong Kong Society of Financial Analysts join the event, representing a range of local, regional, and global firms.

At Credit Suisse, we have established a unique corporate social responsibility (CSR) workshop for employees who are CFA charterholders or CFA programme candidates, where we match them with university students to conduct ethics training workshops. This is taking place in Singapore, Australia and Hong Kong. Deloitte’s research shows that millennials want to work for businesses that show a solid foundation of trust and integrity; as such our ethics workshop is a good fit for employee engagement programmes.

The takeaway? Employee engagement that brings innovation and authenticity to the table can help attract and retain millennial talent.

Beyond the classroom

For 11 successive years, CFA Institute has run the Research Challenge, a global competition that gives university students hands-on mentoring and intensive training in financial analysis. This year, 5,250 students from more than 1,000 universities from 81 countries participated. In Asia Pacific 250 universities participated, with 25 teams advancing to the regional final in Bangkok. Singapore Management University won the regional competition and travelled to Prague for the global final.

Local universities field teams and work with local CFA Institute societies whose members volunteer as mentors, advisers, graders, and judges. Students research a local, publicly-traded company, then write and present their research reports. Professionals who volunteer connect with some of the best and brightest students interested in finance. Students, in return, are exposed to the real world of investing and have the opportunity to interact with industry experts (including management of the company they are researching) and learn more about writing, presenting, and fielding tough questions. Winners receive US$10,000.

What’s unique about the Research Challenge in Asia is the growing participation from emerging and frontier markets. More than 250 universities participated from 16 countries this year, including Bangladesh and Mongolia. Asia Pacific teams have won five times since the global competition began: University of the Philippines – Dillman (2014, 2010), Thammasat University (Thailand, 2012), Nanyang Technological University (Singapore, 2009), and Hong Kong Baptist University (2008).

The takeaway? Millennials interested in finance benefit by learning valuable workplace skills and opportunities that connect them with industry professionals.

Thinking differently

In our Future State of the Investment Profession report published earlier this year, we highlighted the well-known preferences of millennials: technology, transparency, and purpose. As digital natives, millennials often carry smartphones instead of wallets and trust robo-advice. Financial advisers know that transparency is tantamount to earning the trust of clients, be they millennials or any other generation.

Purpose, or personal values, is important to the millennial generation in two ways. First, a preference to work at firms that are socially responsible and, second, a shift in thinking about retirement planning to manage lifetime wealth. As a symbol of success, being socially responsible is often more important than money. Ethics and purpose matter.

The final takeaway? The fundamental purpose of finance is to contribute to society through increases in societal wealth and well-being. Given millennials’ desire for purpose, a career in financial services seems an unqualified match.    

* Nick Pollard is managing director Asia Pacific at CFA Institute