The Big Key to Engaging Millennials (And Why They Need You Now More Than Ever)
Almost 80% of American millennials are extremely or somewhat concerned about affording a comfortable retirement, a newly issued Northwest Mutual Planning & Progress Study shows.
Two-thirds even think they may outlive their retirement savings, the study notes. And likely to the dismay of many, millennials may have reason to be concerned: 20% of the over-2000 18-to-34-year-old millennials surveyed have no retirement savings and nearly half are not prepared for the possibility of outliving their savings, the study notes. But FAs may be able to brighten the bleak picture painted.
By working with financial advisors millennials can alleviate some of their financial pressures with a financial plan, Michael Nathanson, CEO of $8.2 billion AUM RIA the Colony Group, says.
At Colony, many millennial clients say it wasn’t until they created a specific plan to follow that they knew they would be ok, Nathanson says. Colony’s clients aren’t the only ones to see this relief. Some 90% of millennials say nothing makes them happier than feeling their finances are in order.
And working with millennials can also be beneficial to FAs. Millennials have long investment horizons and give advisors the chance to build a strong client relationship over time, Nathanson says.
Advising millennials can also strengthen an advisor’s relationship with current clients, since many clients are often the parents of millennials, Paul Ewing, CEO of $735 million AUM firm Prosperity Advisory Group, says.
FAs not focusing on the millennial generation because they “have no money and are time-consuming” are missing the most important thing older clients care about – their kids, Ewing says.
“Most of our clients are near or in retirement and are concerned about their children not having the benefit of pension plans,” Paul Ried, president and founder of Paul Ried Financial, says. To comfort older clients and jumpstart the investment education process for millennials, Ried brings both parties together and holds family financial meetings.
But before FAs can properly advise millennials, they must understand the cohort’s concerns – and debt is at the forefront.
Some 13% of millennials believe they will be in debt for the rest of their lives, and 35% between the ages of 18 and 24 anticipate moving from the middle class to poor, the study shows. The fear of debt is very real for millennials, and Colony has seen this first hand, Nathanson says.
“Millennials come to us with extraordinary levels of debt,” says Nathanson. They are entering circumstances where home prices and the cost of living are elevated – and they have a large amount of student debt. From being constantly plugged into the news cycle via social media and smart phones, millennials are also more nervous about their financial futures than other groups. Many think: “How do I pay back student loans, think about buying a home, and save for my own kids education?” Nathanson says.
He is not the only FA to see these concerns. Millennials come into the workplace and realize they don’t have defined benefit plans, Ried says. They learn the cost of living takes a larger percentage of their salaries than expected and are discouraged by comparing themselves with previous generations, says Ried. In fact, Ried claims the millennials with which he speaks don’t believe retirement is in their futures. FAs can ease millennial nerves and help guide these young clients to a plan for a better financial future and retirement, advisors say.