What Employers Should Expect from the Generational Shift in Financial Services
The financial services sector is growing at a fairly average rate, according to the Bureau of Labor Statistics. Despite that, hiring managers are battling to keep up with industry-wide changes, from an increasingly complex regulatory environment to evolving technology and customer behaviors. But most challenging of all is the fact that the financial services workforce is built primarily of Baby Boomers, a generation that is now on the cusp of retirement. Accordingly, these organizations must explore and resolve impacts of this generational shift in in its workforce on their business.
Baby Boomers in Financial Services
A recent Accenture study highlights the fact that over 60 percent of the current workforce is older than 40, and this proportion is expected to drop quickly within the next few years. Further, data also show a major decrease in the number of young people who are attracted to banking careers. These statistics strongly suggest that the industry will soon be struggling to attract new talent to fill the gaps that retirees leave behind.
Yet, in many cases, Baby Boomers are not ready to retire, and, for these individuals, adapting to technological change becomes the primary challenge. With consumer habits dictating the ways in which financial institutions deliver their services, there is astronomical growth in complex digital solutions and technical upgrades across the industry. Organizations will need to help their more seasoned workers learn and adapt or else risk losing ground to more forward-thinking competitors.
Attracting Millennials to Financial Services Careers
Having grown up with technology at their fingertips, Millennials are highly equipped to handle the digital revolution that faces the financial services industry. But attracting them to careers in banking, insurance, accounting, investing and brokering is proving very difficult.
Accenture found that within the top two US business schools, the number of students who would choose banking for a career fell by almost 50 percent from 2008 to 2014. Similarly, a PWC study reports that 21 percent of Millennials would rather not work in the financial services sector.
The root causes of this situation appear to be two-fold. First, the economic downturn of 2008 severely impacted the industry’s reputation. Millennials who were early in their careers at the onset of the recession quickly lost trust in financial institutions, and this negative perception still affects their willingness to work for the industry today.
Another important consideration, however, is the fact that financial institutions have traditionally been very rigid in their hierarchies and corporate structures as a result of both regulation and the cultural expectations of the Baby Boomer majority in their workforces. But Millennials are less comfortable with this lack of flexibility than their elder counterparts. Overwhelmingly, they’re looking for interesting careers where they can make a difference and focus on professional development. Furthermore, 94 percent of Millennials in financial services careers are looking for work-life balance, but 28 percent claim that the balance is not good enough in their current jobs.
Finally, according to the aforementioned PWC study, employee loyalty has decreased as a result of the generational shift. Where Baby Boomers have typically worked for only a few different employers throughout their careers, Millennials predict they’ll switch much more often. 52 percent expect that they’ll have up to five employers; 34 percent expect to have six or more throughout the course of their working lives. It is evident, then, that there is a problematic disconnect between what many financial institutions seek in their workforce and what Millennials want out of their careers. In order to fill the talent gaps left by retiring Baby Boomers, this problem must be addressed.
Managing the Intergenerational Workforce in Financial Services
With so much generational shift in financial services, managing interpersonal differences effectively is vital. One of the most important factors is knowledge transfer. Though some Baby Boomers may lag behind in technical literacy, the fact is that their wealth of financial knowledge is staggering and must be transferred to the younger generation of workers.
But effective knowledge transfer can only happen in an environment where each generation respects and values the other. Financial institutions must work to understand the varying values and work styles of each generation. Open communication is key in addressing potential conflict before it becomes a major problem.
Strategies for managing this intergenerational workforce may include mentorship programs, training and professional development opportunities, and a formal re-evaluation of company culture, work environment and associated benefits and perks.
How the Generational Shift in Financial Services Impacts Hiring
Understanding how employer branding is perceived by each generation is critical to meeting workforce needs and hiring goals. Financial institutions that seek to stay ahead of the competition must address the approaching talent gap and redefine their recruitment strategies for attracting Millennials. It’s important to be aware that, in the urgency to fill gaps and sustain a pipeline of talent, quality and integrity of candidates must not be sacrificed. That’s why easyBackgrounds works closely with financial institutions to deliver highly accurate employee background screening.
Find out more about our financial services background checks today.