What Millennials want from a Wealth Advisor

 In Alternative Investment, Investing, Uncategorized

Executive Summary
Millennials are proving to be a challenge for many financial professionals. According to the Ontario Securities Commission, 53% of millennials aren’t investing and 42% of the ones who are have only $25,000 or less in assets. The study also found that 6 in 10 millennials feel they don’t know enough about investing to get started and are worried about loss. To back that up, a study conducted by Deloitte found that millennials are going to be the most conservative group of investors since the great depression. From a wealth advisors’ perspective, these stats can be discouraging. There is good news though. The Deloitte study found that 84% of millennials would still be willing to seek professional advice about their finances. So how do these statistics add up?

Instead of turning away from millennials as potential clients, advisors should look at the above stats as an opportunity to tap into a massively underserved market. However, they may have to make some changes to how they are operating their practices first. Millennial expectations and needs are vastly different then their baby boomer parents.

Debt Management
Millennials are living under record breaking amounts of debt. According to a report done by BNN, the average Canadian has $29,312 in debt and millennials are accumulating debt the fastest. Advisors can offer true value to millennials by becoming well versed in debt management. While this may require some uncompensated work for advisors at first, being able to organize and plan for debt elimination will put you in good standing when the time comes to start accumulating wealth.

Address the Growing Wealth Gap
Unfortunately, the wealth gap in Canada is growing wider everyday. Only being willing to work with wealthy people is going to mean you are missing out on the millennial market. Many young people think they do not have enough money to start investing and current “client minimums” that many advisors are adopting aren’t helping.

Millennials don’t feel good about investing so they need an understanding professional to help them get started. Putting in the work for a young client with few assets will pay off in the future, as you help them grow their wealth and become more confident investors.

Millennials are also going to be on the receiving side of a massive wealth transfer when their baby boomer parents and grandparents pass away. If that money is inherited, don’t you want to be in position to take on those assets when the time comes?

Millennials are the first generation that have grown up in front of a screen. In fact, MarketWatch did a survey that says 39% of millennials would rather interact with their phone than an actual person. They do absolutely everything online and they will expect their finances to be no different. Having technology in place to support your services is going to be imperative. According to a study conducted by Deloitte, 57% of millennials would change financial providers for better technology offerings.

Unlike their parents before them, millennials aren’t going to be interested in calling you to check on their account balances. This generation is used to having the world at their fingertips in the form of their smartphone. Ask yourself if your office and the providers are up to date with technology and how you can better integrate it into your practice. If you haven’t already, its time to get on board with texting clients, communicating through email, skype meetings, and e-signature… at minimum!

Some older advisors may feel this goes against the relationship focused models their practices are built on, but millennials still want the relationship. They are simply used to relating to people in different ways.

Millennials are a mistrusting generation. Transparency should be at the forefront with all clients, but where the older generations were willing to put full trust in their advisors, millennials will be demanding the utmost in ethics and disclosure. They lived through the great recession in 2008 and their faith in financial institutions took a hit as consequence. Therefore, how they want to work with an advisor is changed from previous generations. Millennials want a partner for their financial journey, not a parent telling them what to do and expecting no questions. A study by the Guardian found that nearly 90 percent of millennials say that having a comprehensive financial plan would provide them with the tools they need to meet their financial goals. This should tell advisors that millennials value sound advice and they are willing to have a long-lasting relationship with advisors who are willing to put in the time to understand them.

Social Responsibility
Millennials are faced with an uncertain future with the state of the world and they have an intense sense of social responsibility in every aspect of their life. This holds true with their money as well. Mackenzie investments found that 31 percent of millennial investors either usually or always consider environmental, and social or governance (ESG) factors in their investing. That’s more than double the percentage of baby boomers. This is a significant percentage and this number continues to grow. Advisors who take the time to understand and integrate ethical investing into their offerings will have an automatic leg up on the competition when it comes to attracting millennial investors.

The Bottom Line
Advisors shouldn’t shy away or give up on the millennial market. Taking a little time to understand why millennials aren’t interested in working with old-school advisors can help you tailor a portion (or all!) of your practice to address some of the unique challenges that this generation is facing. Understanding why millennials aren’t investing will provide insight into how you can help them get started and the kind of advisor-client relationship that they are looking for.

Recent Posts

Leave a Comment