As sons and daughters of the last of the baby boomers, Gen Y follows a hard act. At their worst, those born between the 80s and early 90s are sometimes cruelly dismissed as lazy, debt-ridden and programmed for instant gratification. However, they’ve grown up being exposed to a lot of stuff and this has turned them into concerned and caring individuals. Gen Y’ers are mostly admired for their incredibly sophisticated grasp of technology which has largely changed the way we now run our lives, whatever generation we slot into.
In order to understand the inner workings of Gen Y, Asteron Life surveyed more than 1,500 consumers representative of the Australian population to gain a snapshot of changing attitudes and needs within the life insurance industry. Here are some of the Gen Y findings.
21% see a financial advisor regularly
There is a striking gap in terms of financial advice uptake for Gen Y. Only a fifth of them see a financial adviser on a regular basis. And yet many have what are the usual triggers for setting up financial risk protection strategies involving life insurance, income protection, trauma and TPD. Marriage, having children, buying a house – all have traditionally been the reasons behind setting up the right insurance that will hedge the family against hardship should the worst happen.
That said, Gen Ys are immensely comfortable researching insurance online and are therefore more likely to skip seeing an adviser, opting to purchase online too.
34% have household income over $80,000
Income also plays a role in how regularly people see financial advisers. Those who have a household income between $60k and $100k are generally ‘very regular users’ of financial advice services. It also makes them more likely to see the value in income protection. Encouragingly, 34% of 18 to 25-year-olds have household incomes over $80,000. It seems they are yet to experience the changes in their life circumstances that prompt prioritisation of a tailored life insurance strategy to protect their assets against risk.
27% have a mortgage
Key life events are shifting, and shifting fast, affecting Gen Y the most. A striking example of just how quickly major events are progressing to later in life is the average age during first home purchase. In 2009 the average age for buying a first home was 31 – and in 2014 it has increased to 34. It’s no secret that people are marrying later either – for men the average age is now 31 and for women it’s 28, while the average age for having their first child is 31. This is much older than previous generations. Even so, 27% of Gen Ys surveyed by Asteron Life are paying off their own homes and building solid future bases for their young families.
6% have an investment property
A small number of Gen Ys have taken a further step towards wealth creation and purchased an investment property. As their baby boomer parents steer towards retirement, Gen Ys emerge as those having big financial responsibilities – mortgages and dependent kids. It is likely that purchasing some sort of investment property is part of the wealth creation plan but it’s a matter of committing the money to do so. The other speed bump on the road to property ownership concerns the decision made by roughly 10% of first home buyers to skirt the affordability issues and get into the market by buying a property to rent out rather than live in. That way, they can still enjoy the perks of living at home with Mum and Dad. It will be interesting to see how this concept pans out in the near future, particularly as foreign ownership rules, one reason shutting many first home buyers out of the market, have been tightened.
55% save some of their income each month
It’s great news that our younger generation is saving a portion of their salaries every month. According to the Australian Bureau of Statistics, our household savings rate increased to 9% in the third quarter of 2015. That’s up from 8.80% in the second quarter of 2015. With key indicators looking positive – such as consumer confidence on the rise, the jobless rate at a 19-month low – there should hopefully be a continuation of this savings regime by householders. Well, that’s the theory anyway.
In reality, there are a number of other ways Gen Y can save some of their income each month. With the low interest rates on cash savings offered by the banks, stashing away spare money into a savings account is not universally attractive, unless you’re putting money aside for a reason such as kids’ education, holidays etc. Gen Ys can also funnel excess money into debt and home loans. While not actually a dedicated savings account as such, a home loan with redraw facility can act in much the same way when called upon, while reducing your debt to better advantage than interest you would receive in a savings account.
42% are concerned about life threatening diseases
Dengue fever, leprosy, Ebola, cholera, legionnaires’ disease, typhoid, bubonic plague – yes, each year, people still get the bubonic plague, or “Black Death”, which wiped out 60% of Europe’s population in the 14th century. Is it any wonder Gen Ys, along with everyone else, are worried about scary health things that threaten our existence?
Those with children are particularly on alert with the re-emergence of diseases we thought were consigned to history, such as whooping cough, measles, tuberculosis. These are now knocking on our global door, thanks in part to lower vaccination levels and our penchant for travel. However, back in “safe” Australia, the real threats we face include coronary heart disease, various forms of cancer, dementia, Alzheimer’s disease and cerebrovascular disease (which includes stroke). Medical breakthroughs and just looking after ourselves and our families with a healthy lifestyle helps in part to ward off these “evil spirits”. This is all we can do. Plus keep a positive attitude.
40% are concerned about dying before their time
Gen Ys are having too much fun to leave earth before they absolutely have to. While the majority realise there’s only a limited amount you can do to stall dying at a younger age, 40% of those surveyed still expressed a concern about dying before their time. This is not unusual.
19% have life insurance
Although the suite of risk insurances plays a vital role in an individual’s overall financial plan, it’s not always top of mind for most consumers. It is only when they have something of value that they want to protect, such as a home or a family, that insurance becomes a priority. Having a child is by far the most influential trigger to purchase. Asteron Life’s survey shows that 19% of Gen Y have life insurance outside of super. This figure is expected to rise in line with the delay we are now seeing in the ages for experiencing momentous life events.
72% go online first when considering a purchase
Gen Y loves technology and leads the way by using this channel for banking, booking travel, submitting tax returns and researching insurance and other financial services products. Now, they have greater power as they use the internet to research products and services, read and write reviews, and generally become more informed when it comes to purchase decisions
The majority – 72% – state they would not hesitate to go online first when considering a purchase. This is where trusted comparison sites such as Canstar are so valuable. However, the path to purchase doesn’t always end online. 47% of regular financial adviser users research their options online first but ultimately buy their life insurance through an adviser.