If there’s one demographic, aside from baby boomers for obvious reasons, coveted by advisors , it’s millennials. Yes, Gen Z is ripe with intrigue, but the oldest members of that group are just 27 and 10 of the 16 years comprising it imply its members aren’t in the workforce and likely have little or need for an advisor.
Millennials, however, have been working for some time and the older members of that group are well into “adulating,” having families, attempting to buy homes, and save for college and retirement. All of that good stuff. Increasing the allure of this generation to advisors are the points that they’re increasingly wealthy and willing to seek professional financial advice.
So in many respects, millennials are equally as traditional as are their boomer and Gen X counterparts. In other regards, not so much. Millennials are far more tech-savvy than older generations and have delayed marriage and family building relative to boomers and Gen X. Those are among the factors advisors need to consider when courting and working with millennials.
Appreciate the Millennial Timeline
Millennials are defined as those born between 1980 and 1996. Seems like a mundane point, but it’s important for advisors.
“This generation grew up during a unique time—they were old enough to remember 9/11, and many came of age and entered the workforce during a historic recession. Another aspect that sets Millennials apart from older generations?,” according to Nationwide. “The way they approach marriage. Millennials are delaying marriage, and to some extent, foregoing marriage altogether. Knowing this, your Millennials clients will likely differ from your Gen X and Boomer clients in their retirement goals and estate planning.”
Add in the fact that older millennials likely have some recollection of the tech bubble bursting in 2000-01 and it’s fair to say that given the events this generation has seen over the past two decades, some may be skittish about taking risk.
Then there’s student loan debt. More so than other generations, millennials are burdened by college loans and that’s crimping their ability to make financial progress. Making matters worse, many millennials are underemployed.
“Furthermore, compared to Boomers and Gen Xers at the same age, Millennials’ net worth is 20% lower,” adds Nationwide. “This underemployment in addition to student loan debt can impede their ability to save and invest. According to the Education Data Initiative, Millennials carry an average student loan balance of $32,800 per borrower.”
More Millennial Matters to Address
With millennials, there’s more for advisors to evaluate. For example, they’re behind on retirement planning, but they have the advantage of time being on their side and a desire to work with advisors to bolster retirement savings. Likewise, and it could be attributable to youth, 36% of millennials, according to Nationwide, have no estate plan.
And none of that includes millennials’ dependence on social media for financial advice, which brings with it obvious risks. Add it all up and this generation is unique and receptive to advisors’ help.
“Millennials’ unique experiences, financial challenges, and information-seeking behaviors necessitate a different approach to financial planning compared to previous generations,” concludes Nationwide. “As a financial professional, understanding these distinctions is key to supporting your Millennial clients. By adjusting your strategies to cater to Millennials’ needs and preferences, you can help this generation build financial security and help them plan for a comfortable retirement.”
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