By Misty Weltzien
As an advisor, it’s easy to overlook connecting in person with current and prospective millennial clients. The generation consisting roughly speaking of today’s 22- to 37-year-olds is tech savvy and efficient. Why spend time in person with the population who turns to online tools and the latest apps for personal finance when you could be acquiring your next high net worth client or booming business owner?
When it comes to financial planning, skipping out on this generation would be a big miss for advisors. Not only are millennials extremely receptive to advice, but it is projected that millennials will inherit the largest amount of personal wealth of any generation, known as the great wealth transfer. Also, contrary to stereotypes, millennials value human experiences as much as they value tech-driven solutions and digital efficiencies.
In particular, millennials are more likely than any other generation to say that having a financial advisor they trust is important to their financial confidence. According to a recent Guardian study, “Millennials and Money: Understanding What Drives Financial Confidence,” millennials value a balance between digital and human experiences to be financially confident. Interestingly, the study reveals millennials prefer to communicate with an advisor via face-to-face meetings and that nearly three-fourths say they would be open to attending an in-person financial seminar. This means there is a strong opportunity for advisors to work with millennials early on in their financial planning journey, establish a cadence for regular contact and provide them with the guidance to reach their financial goals.
The study reveals some key findings in terms of millennials’ financial planning habits and preferences. Whether you’re an advisor hoping to find your first millennial client or if you’ve been working with them for years, there are some important steps you should consider taking when working with this generation.
Start with a Plan that Plays Offense and Defense
When it comes to overall financial confidence, millennials across the U.S. say having a detailed financial plan is equally as important to them as getting a bonus at work. This is a compelling discovery, revealing that the career-driven generation places significant value on financial planning. As a result, you should place high importance on developing thoughtful plans tailored for each of your millennial clients. Be sure that planning for this generation includes a strategy to position millennial clients on both offense and defense—Use this analogy to discuss incorporating tactics for growing and investing their money, while also leveraging defensive tools like life insurance or disability income insurance that will help protect their financial futures in the years to come.
Guardian’s study reveals that millennials value liquidity and access to their money. Millennials have entrepreneurial aspirations, such as opening their own businesses or investing in real estate. All of these require access to money in a way that 401ks and IRAs may not allow. Explore conversations about the options available and how millennials can build a plan that creates easy access to cash, while also setting some funds away for longer-term growth. Additionally, present millennials with a range of vehicles that can offer liquidity and growth options. For instance, life insurance policy cash values can be accessed to fund major life milestones such as education or buying a home later in life. There are a variety of products and tools that can meet their unique needs, so it’s important to emphasize options.
Convey the Importance of Strong Savings Habits
Come up with some basic savings guidelines for clients to stick to, such as setting aside 15 percent of gross pay for emergencies and regular contributions to retirement plans. As the generation is typically comfortable with online functions, encourage them to set up automatic deposits into savings accounts. Make sure savings goals are realistic and achievable based on current expenses and income. Millennial clients have the opportunity to build strong financial foundations when they start young, so advisors can play a key role by encouraging clients to develop strong savings habits early in their financial journeys.
Host Monthly Networking Events or Seminars
Millennials are incredibly open to in-person conversations and events, and they want to learn from the experts. Work with your firm to host an evening for young professionals to come learn about a topic important to them, such as financial wellness or tips for young parents. Invite a guest speaker to encourage attendance and facilitate beneficial conversations. This will help showcase your interest in connecting with millennials and it will provide them with an opportunity to ask questions, connect with peers and begin building a relationship with a potential new advisor or firm.
Guardian’s study also found that more than half of millennials prioritize protection over saving and investing. Despite their growth-oriented and fast-paced nature, millennials value protecting their futures and their families, perhaps more so than investing. Advisors should assist their clients in building out plans that prioritize protection through insurance products. This also means conversations about the future, such as retirement planning, funding college for future children, caring for an aging parent, securing income in case of a disability and having the right tools in place if an unexpected medical procedure is needed for a pet.
Millennials are the generation with the largest amount of business owners. They are not only business owners at higher rates than other generations, but millennial business owners are doing well by most standards. This means that advisors are in a unique position to advise these clients on how to foster a solid financial foundation for their personal lives and their businesses. Often, personal finance becomes a last priority for young business owners as they focus on the business’ finances instead of their own personal goals.
One opportunity advisors can take is to help millennial business owners work toward diversifying their wealth. While their business is a main source of income, inform clients about other types of investments and retirement funds that will become a source of wealth outside of their business. A business valuation by a third party can also help millennial business owners understand the true value of their business and how much they will need to save to support their lifestyle during retirement. It will give them a tangible understanding of why they should diversify and what additional income sources exist that they can explore with you.
Overall, advisors have the potential to make a significant impact on millennials’ financial futures and should be eager to pursue young, tech-savvy clients that are seeking long-term, in-person advice. The generation clearly sees the value in working with advisors and developing detailed financial plans. With the right guidance, this group can grow, protect and invest in their futures for the years to come.
Misty Weltzien is a managing partner and director of business development for Pacific Advisors in Newport Beach, California. She is also a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 3585 Maple Street, Suite 140, Ventura, CA 93003, 909-399-1100. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Pacific Advisors LLC is not an affiliate or subsidiary of PAS or Guardian.