Regardless of age, other demographic traits and income, prospective clients can derive substantial value from working with registered investment advisors.
Advisors’ perspective may be the more clients, the merrier, but there is evidence suggesting it pays to have refined focuses when it comes to garnering new business. Not surprisingly, advisors are regaled with tips and reasons to work with younger clients –namely milliennials and Gen Zers. Simple math confirms the viability of working with these groups. They’ve got more lifespan ahead of them than say baby boomers and they, along with Gen X, will be on the receiving end of the great wealth transfer.
Important as those points are, there are other reasons why advisors should be working with younger clients and without delay. Notably, millennials and Gen Z aren’t as financially optimistic as previously believed. That’s not to say they’re overtly negative, but they have concerns and that spells potential opportunity for advisors.
Heed the Findings in this Survey
A recent report from the TIAA Institute and Business for Impact's AgingWell Hub at Georgetown University contains some revealing, pertinent data points for advisors to ponder. The report – the Young Adults Personal and World Outlook Survey – polled folks in the 24 to 35 age range, so it doesn’t include the oldest millennials.
The report finds that 42% of those surveyed are living paycheck-to-check while just a third are prepared to handle a major expense while barely more than half feel they’re poised to do better than their parents financially. Other data points confirm the need these groups have professional financial advice.
“About 20% of them turn to social media as a trusted source of information for retirement planning, but there are more proven ways for younger workers to get help,” noted Surya Kolluri, head of the TIAA Institute. “They should seek out financial advisors to craft plans that meet their short- and long-term financial goals. Employee retirement plan sponsors can also help younger workers by automating retirement plan contributions, offering plans with guaranteed lifetime income and by increasing access to financial wellness tools.”
There was some good news, too. Fifty-four percent of those surveyed want to retire at some point while 36% are actively saving for retirement today. Those are solid starting points, but those percentages also imply millennials and Gen Z are fertile territories for advisors.
“Almost three in four young adults (72%) indicate they are saving in a retirement plan – either through their workplace (48%), one that they purchased on their own (13%), or both (11%),” according to the survey.
Gender, Racial Considerations
The above statistics are broad, so advisors should also heed the gender and racial breakdowns in the survey. Notably, women and African-Americans are worried about their financial futures, indicating bother should be target audiences for advisors.
“While there was little difference in whether the genders said they're living paycheck-to-paycheck, 50% of men said they're securing their financial future (compared to only 30% of women), and 45% of men said they can enjoy life because of the way they're managing their money (compared to 30% of women),” notes TIAA.
Half of Black respondents said they’re living paycheck-to-paycheck compared to 44% of their white counterparts. However, there are some encouraging data points on this front.
“When asked whether they're securing their financial future, however, 55% of Black Americans said yes, compared to 35% of whites, and 47% of Hispanic/Latinos. Only 6% of Black Americans said they did not expect to ever be able to afford to fully retire, compared to 16% of whites and 11% of Hispanic/Latino young adults,” concludes the report.