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Private & Confidential Project Management Institute 13 November 2012
Engaging
Generation
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Robert Gardner
13 November 2012
Private & Confidential Project Management Institute 13 November 2012 2
Generation Y: Impact on Retirement Planning 2025
Private & Confidential Project Management Institute 13 November 2012 3
Millennial Generation
Generation Next
Net Generation
iPod Generation
Echo Boomers
Generation Y
Private & Confidential Project Management Institute 13 November 2012
Baby Boomer Generation X Generation Y Gen Z
• Now aged 49-64 • Idealistic, career-oriented, consumerist • Promoted ‘young’ and propped • Peak income earning 1991-2005 • Succession planning, advisory boards, non-exec directors
• Now aged 34-49 • Realists, cynical • Held back by “old fart log-jam” • Peak income earning 2006-2021 • Office sandwich gen, resentful of Boomer focus on Y’s • Must deal with baby boomers in retirement
• Now aged 19-34 • By 2025 will make up largest population of workforce and fill senior management roles •Experiential, ethicists, uncommitted to career/relationships • Helicopter kids; KIPPERS • Technology savvy; global thinking • Inherit Boomer wealth
• Aged 19 or less • Will enter workforce from 2020 • First generation to be taught internet computer technology from age 5
Generation Timeline
1993-Present 1978-1992 1963-1978 1948-1962
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Private & Confidential Project Management Institute 13 November 2012
How Times Change....
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Generation Y Generation X
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Private & Confidential Project Management Institute 13 November 2012
Generation Y
Pension Provision – Shift in Responsibility
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Defined Benefit Defined Contribution
Timeline
0 10 20 30 40 50 60 Age 70
Defined Contribution
Defined Benefit
Private & Confidential Project Management Institute 13 November 2012
Generation Y
Challenges
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“I believe that I will start my pension in my early 30’s.
By this stage of life, I will have steady income and thus
can afford to save a chunk of my income without a
compromise 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 to
wait until I’m fifty and have a million dollars. By then I
won’t want to do these things and I will have missed
out”
-Anonymous
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Private & Confidential Project Management Institute 13 November 2012
43%
Have never received any form
of financial education
“ I think the main reason for low uptake on pensions by
students is due to lack of knowledge and education of
saving and pensions schemes.”
-Anya, student at University of Oxford
Generation Y
Financial Planning
• In England and Wales financial planning is not
compulsory but features in Key Stage 3&4 (11 - 16yrs)
• Japanese children taught about pensions and saving for
retirement from an early age (11 - 18) by local
municipality officials
• Sessions not limited to schoolchildren
• All nationals between 20 - 59 are required to enrol
in the national pension plan
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Private & Confidential Project Management Institute 13 November 2012
Engaging Generation Y
Social Media and Technology
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Private & Confidential Project Management Institute 13 November 2012
Redington’s Seven Steps
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Private & Confidential Project Management Institute 13 November 2012
Engaging Generation Y
Lifestyle Risk Management Framework
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Objective Example Objective Example Performance Actual
Performance
State Your Objective
I want to retire at 65 with a
sufficient guaranteed
income to support my family
and myself.
I have £X,000 available in a lump-
sum upon my retirement in Y years
State your Risk Targets
To avoid sustained losses
and focus on steady-not-
super growth
Maximum loss any year should not
exceed 10% of my savings
State Your Dream Goals I have a dream – to retire
happy when I’m 55
Savings contributions are greater
than originally planned
State your Biggest Fears
I am unable to save for
retirement or rainy days
AND spend on a sunny day
My long-term savings plan does not
leave enough cash in my pocket to
cover short-term expenses
Metric is at or above target Metric is more than 10% away from target Metric is within 10%of target
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Private & Confidential Project Management Institute 13 November 2012
Applying DB to DC
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Cutting Edge DB Pension Fund
“Return Asset” Portfolio
Liquid Alpha& Beta
40%
70% Developed / 30 Emerging MSCI Equities, 10% Volatility Target
40% Risk Parity
20% CTA
Liquid Credit
40%
1 to 10 Year Go Anywhere Credit, 75% Investment Grade, 25% High Yield / Leveraged Loan
30% Over 10 Year GBP Senior Investment Grade Credit
30% Over 10 Year USD Senior Investment Grade Credit
Illiquid Credit
33% Investment Grade Secondary Swaps
33% PFI Debt
33% Secured Leases
Illiquid Alpha & Beta
50% Cat Insurance
50% Macro Hedge Fund
Portfolio after Applying DC Constraints
Liquid Alpha& Beta
40% 10% Vol Controlled Global Equities Fund (Passive)
40% Risk Parity Fund (Semi-Passive)
20% Absolute Return Funds (GARS, Dynamic Asset Allocation) (Active)
Liquid Credit
40%
75% Investment Grade Fund (Passive) 25% High Yield Fund (Semi-Active)
30% Longer Duration UK Investment Grade Fund (Passive)
30% Longer Duration US Investment Grade Fund (Passive)
Illiquid Credit 100% N/A
Illiquid Alpha & Beta
50% Cat Insurance Fund (Semi -Active)
50% Real Estate Fund (Semi-Active)
Pragmatic “Day 1” Solution
Liquid Alpha& Beta
100% Risk Controlled Multi-Asset Strategy
Liquid Credit 100%
Broad Credit Fund (Active) and/or Range of Credit ETFs
Illiquid Credit 100% N/A
Illiquid Alpha & Beta
100% Real Estate Fund (Semi-Active)
Private & Confidential Project Management Institute 13 November 2012
Generation Y
Financial Education
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Freddie Ewer
Analyst
Direct Line: 020 3326 7133 freddie.ewer@redington.co.uk
Jonathan Letham
Analyst
Direct Line: 020 3326 7108 jonathan.letham@redington.co.uk
• Financial education for young people in the UK is woefully inadequate, particularly given the responsibility placed on
the 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.
Private & Confidential Project Management Institute 13 November 2012
13-15 Mallow Street London EC1Y 8RD Telephone : +44 (0) 20 7250 3331 www.redington.co.uk
Contacts
Robert Gardner Founder & Co-CEO
Direct Line: +44 (0) 20 7250 3416
Telephone: +44 (0) 20 7250 3331
robert.gardner@redington.co.uk
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The information herein was obtained from various
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and is for discussion purposes only. A variety of market
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this analysis does not reflect all possible loss scenarios.
There is no certainty that the parameters and
assumptions used in this analysis can be duplicated with
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