Millennials are expected to inherit a staggering $68 trillion from the baby boomer generation.
However, they are not necessarily following their parents’ footsteps in managing their money.
The rise of online money management platforms has given millennials more options than their parents had.
Many are choosing to handle their finances independently. A recent survey by the National Association of Personal Financial Advisors revealed that 62% of millennials get their advice online or from social media, while only 21% primarily use a financial advisor.
Despite this, there are still opportunities for advisors to connect with younger clients, according to experts at the CNBC Financial Advisor Summit.
Millennials have experienced major events like 9/11, the Great Recession, and the Covid-19 pandemic, leaving 38% of them feeling less optimistic, according to Kristi Rodriguez, senior vice president at the Nationwide Retirement Institute, citing a recent survey.
This has changed their openness to working with an advisor. In 2016, less than 50% of millennials surveyed by Nationwide saw a need for professional advice. By 2020, over 75% expressed a desire to work with an advisor to manage risk and plan for retirement, Rodriguez said.
While it’s a joke that millennials have killed certain industries, this is not true for financial advice, said Jon Mauney, general manager at Betterment.
“I don’t think millennials have killed or are killing financial advisors,” Mauney said.
To attract younger investors, aged 25 to 40, advisors need to approach them differently than they do their parents.
Offering flexible options, such as a variety of pricing instead of a one-size-fits-all fee based on assets under management, appeals to this generation, Mauney said.
Additionally, making millennials feel understood goes a long way, according to Rodriguez.
“They want you to truly understand their ‘why,’” Rodriguez said.
Millennials also prefer diversity in advisor teams in terms of age, ethnicity, and socioeconomic backgrounds, she added.
The good news for financial advisors is that an introduction to millennials may already be possible through their boomer clients.
“Say ‘bring in your millennial child, let’s have a more comprehensive conversation and bring them into the fold,’” Rodriguez suggested.
