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Keep Millennials In Sight as Prospects

Millennials, or the generation of individuals born between 1980 and the early 1990s, are typically laden with debt, underemployed, distrusting of financial advisors and highly risk averse when investing. Despite those characteristics, they are attractive prospects for financial advisors.

Indeed, many millennials are entering career phases in which their earnings are increasing. At the same time, many are likely to inherit wealth from their Baby Boomer parents. With that in mind, advisors should brush up on ways to market to millennials as the unique characteristics of the generation call for a customized selling strategy.

Unlike other generations that have focused on achieving financial security, millennials are motivated by the opportunity to enjoy experiences, such as vacations. Many millennials, furthermore, are highly risk averse, having experienced the 2008 financial crisis and the sluggish economic growth in the years following that event.

The financial crisis has made many millennials cynical about the financial industry. Many tend to distrust financial advisors, meaning they will require substantial face-to-face time with advisors before becoming clients. Sluggish economic growth following the 2008 crisis, furthermore, has prevented many millennials from excelling in their careers and improving their earnings. That, when combined with high levels of college debt, means that many millennials are struggling to make ends meet.

Various surveys, meanwhile, have shown that many millennials lack sufficient knowledge to manage their finances without the help of an advisor. Millennials are also characterized as being highly technical savvy, having grown up with the Internet.

With those facts in mind, advisors should consider the following points when pitching their services to millennials:

  • Advisors should emphasize that their planning services can help individuals financially prepare to enjoy new experiences, such as vacations and what may be the ultimate experience, retirement. For example, advisors can offer to help clients craft budgets that include provisions for saving for vacations and retirement. By emphasizing that budgeting will allow millennials to enjoy experiences, advisors will be using explanations that appeal to the generation. By offering budgeting help, furthermore, advisors will be addressing millennials’ struggles with making ends meet.
  • Advisors targeting millennials should focus on conducting seminars and one-on-one meetings to gain millennials’ trust. Even though millennials have been raised with the Internet, only 1% of respondents in a recent BNY Mellon study said they want to be contacted by advisors via social media as it would be “silly,” “pally,” or “creepy.” Respondents instead said they would prefer face-to-face meetings, telephone conversations, email or communications via a non-social media website.
  • Advisors should also be prepared to illustrate the need for investing in equities. Many millennials are risk averse, so they have failed to embrace equities. As such, they are less likely to reach their long-term savings goals. With this in mind, advisors should be able to show savings projections based on asset allocations that include equities. They should also be able to show how equities have historically regained their value after declining in bear markets and over long term periods, have generated positive returns.
  • Advisors also need to have compelling web content and web-based services, such as account access. Millennials, having been raised with the Internet, have high expectations for web-based services. At the same time, many feel ill prepared to handle their own finances, so they need compelling web-based content to learn more about investing and other topics.
  • Advisors should also seek to generate relationships with millennial children of Baby Boomer clients. That way, when Boomers pass on wealth to their millennial children, an advisor will be in a strong position to manage the assets.
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