Engaging Generation Y

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Engaging Generation Y

  1. 1. Private & Confidential Project Management Institute 13 November 2012EngagingGeneration1Robert Gardner13 November 2012
  2. 2. Private & Confidential Project Management Institute 13 November 2012 2Generation Y: Impact on Retirement Planning 2025
  3. 3. Private & Confidential Project Management Institute 13 November 2012 3Millennial GenerationGeneration NextNet GenerationiPod GenerationEcho BoomersGeneration Y
  4. 4. Private & Confidential Project Management Institute 13 November 2012Baby Boomer Generation X Generation Y Gen Z• Now aged 49-64• Idealistic, career-oriented, consumerist• Promoted ‘young’ andpropped• Peak income earning1991-2005• Succession planning,advisory boards, non-execdirectors• Now aged 34-49• Realists, cynical• Held back by “old fartlog-jam”• Peak income earning2006-2021• Office sandwich gen,resentful of Boomer focuson Y’s• Must deal with babyboomers in retirement• Now aged 19-34• By 2025 will make uplargest population ofworkforce and fill seniormanagement roles•Experiential, ethicists,uncommitted tocareer/relationships• Helicopter kids; KIPPERS• Technology savvy; globalthinking• Inherit Boomer wealth• Aged 19 or less• Will enter workforcefrom 2020• First generation to betaught internet computertechnology from age 5Generation Timeline1993-Present1978-19921963-19781948-19624
  5. 5. Private & Confidential Project Management Institute 13 November 2012How Times Change....55Generation YGeneration X5
  6. 6. Private & Confidential Project Management Institute 13 November 2012Generation YPension Provision – Shift in Responsibility6Defined Benefit Defined ContributionTimeline0 10 20 30 40 50 60Age 70Defined ContributionDefined Benefit
  7. 7. Private & Confidential Project Management Institute 13 November 2012Generation YChallenges77“I believe that I will start my pension in my early 30’s.By this stage of life, I will have steady income and thuscan afford to save a chunk of my income without acompromise in my standard of living.”-Vivek, student at Wyggeston & Queen College• Attitude of consumption over savings• Increased cost of living• Myopic – short-term goal oriented• Demand instant gratification• Lack of financial education• “Tech dependent” for communication“I want to be able to do things now. I don’t want towait until I’m fifty and have a million dollars. By then Iwon’t want to do these things and I will have missedout”-Anonymous7
  8. 8. Private & Confidential Project Management Institute 13 November 201243%Have never received any formof financial education“ I think the main reason for low uptake on pensions bystudents is due to lack of knowledge and education ofsaving and pensions schemes.”-Anya, student at University of OxfordGeneration YFinancial Planning• In England and Wales financial planning is notcompulsory but features in Key Stage 3&4 (11 - 16yrs)• Japanese children taught about pensions and saving forretirement from an early age (11 - 18) by localmunicipality officials• Sessions not limited to schoolchildren• All nationals between 20 - 59 are required to enrolin the national pension plan8
  9. 9. Private & Confidential Project Management Institute 13 November 2012Engaging Generation YSocial Media and Technology9
  10. 10. Private & Confidential Project Management Institute 13 November 2012Redington’s Seven Steps10
  11. 11. Private & Confidential Project Management Institute 13 November 2012Engaging Generation YLifestyle Risk Management Framework1111Objective Example Objective Example Performance ActualPerformanceState Your ObjectiveI want to retire at 65 with asufficient guaranteedincome to support my familyand myself.I have £X,000 available in a lump-sum upon my retirement in Y yearsState your Risk TargetsTo avoid sustained lossesand focus on steady-not-super growthMaximum loss any year should notexceed 10% of my savingsState Your Dream GoalsI have a dream – to retirehappy when I’m 55Savings contributions are greaterthan originally plannedState your Biggest FearsI am unable to save forretirement or rainy daysAND spend on a sunny dayMy long-term savings plan does notleave enough cash in my pocket tocover short-term expensesMetric is at or above target Metric is more than 10% away from targetMetric is within 10%of target11
  12. 12. Private & Confidential Project Management Institute 13 November 2012Applying DB to DC12Cutting Edge DB Pension Fund“Return Asset” PortfolioLiquidAlpha& Beta40%70% Developed / 30Emerging MSCIEquities, 10% VolatilityTarget40%Risk Parity20%CTALiquid Credit40%1 to 10 Year GoAnywhere Credit, 75%Investment Grade,25% High Yield /Leveraged Loan30%Over 10 Year GBPSenior InvestmentGrade Credit30%Over 10 Year USDSenior InvestmentGrade CreditIlliquid Credit33%Investment GradeSecondary Swaps33%PFI Debt33%Secured LeasesIlliquid Alpha& Beta50%Cat Insurance50%Macro Hedge FundPortfolio after Applying DC ConstraintsLiquid Alpha&Beta40%10% Vol ControlledGlobal Equities Fund(Passive)40%Risk Parity Fund (Semi-Passive)20%Absolute Return Funds(GARS, Dynamic AssetAllocation) (Active)Liquid Credit40%75% Investment GradeFund (Passive)25% High Yield Fund(Semi-Active)30%Longer Duration UKInvestment GradeFund (Passive)30%Longer Duration USInvestment GradeFund (Passive)Illiquid Credit 100%N/AIlliquid Alpha& Beta50%Cat Insurance Fund(Semi -Active)50%Real Estate Fund(Semi-Active)Pragmatic “Day 1” SolutionLiquidAlpha& Beta100%Risk ControlledMulti-AssetStrategyLiquid Credit 100%Broad Credit Fund(Active) and/orRange of CreditETFsIlliquid Credit 100%N/AIlliquid Alpha& Beta100%Real Estate Fund(Semi-Active)
  13. 13. Private & Confidential Project Management Institute 13 November 2012Generation YFinancial Education13Freddie EwerAnalystDirect Line: 020 3326 7133freddie.ewer@redington.co.ukJonathan LethamAnalystDirect Line: 020 3326 7108jonathan.letham@redington.co.uk• Financial education for young people in the UK is woefully inadequate, particularly given the responsibility placed onthe shoulders of young people by the DC pension system.• Moneythink fills this gap, using the skills developed by young professionals to share knowledge and skills.• Moneythink Redington is actively looking for partner organisations and schools to participate in our programme.
  14. 14. Private & Confidential Project Management Institute 13 November 201213-15 Mallow Street London EC1Y 8RD Telephone : +44 (0) 20 7250 3331 www.redington.co.ukContactsRobert GardnerFounder & Co-CEODirect Line: +44 (0) 20 7250 3416Telephone: +44 (0) 20 7250 3331robert.gardner@redington.co.uk14Disclaimer For professional investors only. Not suitablefor private customers.The information herein was obtained from varioussources. We do not guarantee every aspect of itsaccuracy. The information is for your private informationand is for discussion purposes only. A variety of marketfactors and assumptions may affect this analysis, andthis analysis does not reflect all possible loss scenarios.There is no certainty that the parameters andassumptions used in this analysis can be duplicated withactual trades. Any historical exchange rates, interestrates or other reference rates or prices which appearabove are not necessarily indicative of future exchangerates, interest rates, or other reference rates or prices.Neither the information, recommendations or opinionsexpressed herein constitutes an offer to buy or sell anysecurities, futures, options, or investment products onyour behalf. Unless otherwise stated, any pricinginformation in this message is indicative only, is subjectto change and is not an offer to transact. Whererelevant, the price quoted is exclusive of tax anddelivery costs. Any reference to the terms of executedtransactions should be treated as preliminary andsubject to further due diligence .Please note, the accurate calculation of the liabilityprofile used as the basis for implementing any capitalmarkets transactions is the sole responsibility of theTrustees actuarial advisors. Redington Ltd will estimatethe liabilities if required but will not be held responsiblefor any loss or damage howsoever sustained as a resultof inaccuracies in that estimation. Additionally, the clientrecognizes that Redington Ltd does not owe any party aduty of care in this respect.Redington Ltd are investment consultants regulated bythe Financial Services Authority. We do not advise onall implications of the transactions described herein.This information is for discussion purposes and prior toundertaking any trade, you should also discuss withyour professional tax, accounting and / or other relevantadvisers how such particular trade(s) affect you. Allanalysis (whether in respect of tax, accounting, law or ofany other nature), should be treated as illustrative onlyand not relied upon as accurate.©Redington Limited 2012. All rights reserved. Noreproduction, copy, transmission or translation in wholeor in part of this presentation may be made withoutpermission. Application for permission should be madeto Redington Limited at the address below. RedingtonLimited (6660006) is registered in England and Wales.Registered office: 13-15 Mallow Street London EC1Y8RDTHE DESTINATION FOR ASSET & LIABILITY MANAGEMENThttp://twitter.com/robertjgardnerhttp://uk.linkedin.com/in/robertjgardnerRisk Management Firm of the Year(2011, 2012)Pension Consultant of theYear 2012

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