The November issue of The Insurance & Investment Journal has an article telling us that millennials – those born between 1980 and 1995 – are advice seekers. Moreover, they represent a great opportunity for help via financial advisors in the coming years.
I’m the parent of twin boys in this cohort, so I’ll be watching.
There are two stumbling blocks to this apparent pathway of opportunity for advisors.
According to another short article, based on the results of a recent British Columbia Securities Commission study, only about 30% of those over age 34 invest with an advisor; incidentally, the majority of those don’t know how their advisor gets paid. Clearly some potential for putting in seed work exists for advisors prepared to do prospect farming, growing above the crowd, for picking at all ages.
With respect to the millennials per se, an Environics Research study identifies them as “the biggest opportunity that most of us will have to work with in the coming years in terms of where asset accumulation is going to take place”. Not only their numbers will ne appealing but also their pending access to family wealth transfers, especially from real estate. This group will need help with goals and plans.
However, most millennials currently are bogged down with school debt, and/or underemployment particularly with what they thought their post-secondary education would lead them to, plus their expected longer life spans. Moreover, they do have questions, no doubt affected by being the first generation exposed to 24/7 social media from an early age, from my perspective one of the major communication challenges with older generations. They are tech savvy, but it seems do want to have someone to help with financial services. Trust and dialogue are prime components of a respectful relationship.
Taking advantage of technology is not a universal preference. The idea of cost-effective ‘robo-advisors’ is a thumbs down for them at this point.
Millennials tend to be conservative in investment nature. They prefer to have a different advisor than their parents, which in my experience would be a quite different attitude from the previous set of parents and adult children. They depend on peer group recommendations, 20% more than baby boomers.
They want to benefit from modern financial software, but also want ‘advisors who can present them with a holistic view’, and want convenience.
All these aspects given, in fact millennials represent a larger demographic group than Generation Xers; many have been coming to see financial services as a profession.
However, as in my years in the industry, the low proportion of women is likely to remain a problem. But then, every problem proverbially carries with it opportunity…