The Millennial generation, as a group, takes a lot of heat from stereo types. They are criticized as entitled, overly optimistic, lazy, tech-obsessed group who still lives at home, have minimum wage jobs (if any) and a mountain of student loan debt. That’s a pretty bleak picture of a generation of 80 million strong. However, the financial services industry seems perplexedly interested in this high risk group. If you push aside the stereo types and dig a little deeper into the data, you may find reason to focus and become more interested in this generation of so-called-narcissists.
The financial services industry often makes assumptions about this group from data in other industries. In reality, it is misguiding to do so:
Many advisors have been told that this generation prefers to connect through social media and therefore it is important to use LinkedIn and Facebook to meet them. While true for retailers and other service businesses, less than 1% of Millennials want to engage with financial service providers on social media. Not surprising, they find advisors who reach out to them because of birthdays, marriages, new kids or new jobs to be “silly” or “creepy.”
Advisors also tend to think that Millennials trust their friends and social media for financial advice. This is again misguided as 52% approach their parents for financial advice first. Banks came in second at 24% and friends only ranked 4th.
Advisors think Millennials are skeptics who do not trust the financial services industry and their products since the 2008 crash. In reality, the majority of Millennials (65%) trust these products and services; the problem is 46% don’t trust advisors.
Lastly, advisors often think that Millennials will get their financial knowledge online and education is a wasted effort. In fact, there is a large gap for financial literacy as 84% of Millennials are seeking advice, but only 61% accept it when offered.
So what can we derive from this information? Opportunity! Millennials are looking for advice and will likely work with someone their parents (your clients) recommend. Your challenge is to figure out a better message than what’s worked in the past. Hint: it is not having a lot of likes on Facebook.
But why bother with this generation. If they are deep in debt with limited employment opportunities, are they speculative investments for your firm’s future? Again, we turn to data:
- They will have money to spend: By 2018, they will eclipse boomers in total spending @ $3.39 trillion
- They are the future business leaders: In 2011, they opened 160,000 startups….MONTHLY. 29% of all entrepreneurs that year were between 20-34 years old.
- They are smart: 71% were in AP courses in high school and 68% continued on to college. 58% will achieve a bachelor’s degree.
- They are maturing: Over 22 million are parents with 10,000 giving birth each day.
This generation is full of entrepreneurs and growing families. They have immediate financial planning needs and many will mature into great clients. As Millennials begin to inherit money from their Boomer parents their wealth and spending power will continue to grow. For financial advisors, this is the future of many firms and they need to focus on attracting these clients today. What steps can you take to begin the conversation?
- Have the right technology. Millennials prefer to be contacted though videoconference and/or email. Get over the face-to-face meetings and sending out letters, their parents appreciate it, they don’t.
- Provide education that focuses on the relationship and their future, not on your process and products.
- Customize offerings to fit their needs; with growing families and businesses many Millennials need to understand budgeting and insurance over financial planning and investments. Be patient, in time those areas will come.
- Leverage referrals. Millennials are a very social bunch and share resources, have an open dialogue with them about their friends and colleagues.
The Millennial Generation is not one without challenges, but despite their stereotypes and economic depression, they are primed to be the next business leaders. For those advisors that recognize the need and the opportunity, they will benefit from this misunderstood group.
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