Millennials: Should Financial Advisors Embrace or Avoid Them?
Who are Millennials: the generation of people in their 20s and 30s — are a population of folks who have a lot of positive attributes, namely immense creativity and a thirst to make the world around them a better place. As a full disclaimer, I am a millennial, but I wouldn’t necessarily recommend that advisors work with us. At least, perhaps not yet.
Millennials have a number of traits that don’t make them ideal clients for a financial advisor who is used to working with established clients who easily adhere to financial advice. Here are some examples: (For related reading, see: Money Habits of the Millennials.)
1. Millennials Are Entrepreneurial
While an entrepreneurial spirit isn’t necessarily a bad thing, it can certainly mean that the client has a variable income. One month could see great revenue returns while another, not so much. Generally, innovation is one of millennials’ greatest strengths, but in terms of being an ideal client for an advisor, it could be a while before he or she becomes wealthy or his or her business becomes profitable.
Because millennials are more entrepreneurial, they are also typically interested in investing in other entrepreneurs and new or upcoming technologies. Advisors who have been in business for quite some time might not be able to relate to these goals or might not see these investments — which are definitely considered risky — as safe or conservative choices, which can cause some head-butting.
2. Millennials Are Independent
Although many people like to give millennials a hard time for being spoiled, the reality is that they’re fiercely independent, especially when it comes to pursuing goals and staying true to their own beliefs. For that reason, it can be difficult for millennials to follow specific directions that a financial advisor might have. They might have their own ideas of how they want their retirement to look and how they want to get there. Even if they seek out a particular advisor for their advice, if they don’t like the advice or don’t think it’s sound, they generally will not heed it.
3. Millennials Are Impatient, Tech-Dependent
Growing up with computers and smart phones means that millennials like to have information and results immediately. We live in the land of same-day shipping. It can be difficult to envision the long-term benefits of financial planning and investing. Not only that, but millennials prefer to conduct most of their communication over the Internet and not necessarily in person. Because of this, it can be difficult to develop a genuine relationship with them because they prefer to interact over their devices and not over the desk in your office.
4. Millennials Have Significant Debt
Many millennials suffer the burden of debilitating student loan debt. Because the average student now graduates with around $35,000 worth of student loan debt, it might take millennials significant time to pay off their debt and slowly build wealth. While financial advisors should be willing to help all types of people with their finances — not just the wealthy — it might be difficult for millennials to become profitable clients, at least at first.
The Bottom Line
Millennials are a unique population. They hold a lot of promise and are known for their ingenuity and creativity. However, because of their large student loan debt, their tendency to want to conduct their life in their own way, and their penchant for wanting quick results, they might not necessarily be the best (or easiest) clients for financial advisors under their current operating practices. Eventually, though, advisors who want to remain in business over the coming decades will have to learn how to work with millennials as they get older and as they need more help with their finances. Step one? Embracing the technology and communication methods they are using now and will be be using in the near future. (For related reading, see: A Financial Advisor’s Guide to Millennial Clients.)
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