Baby boomers and Generation X have long been targets of the financial services industry. But the up and coming millennial generation is right behind.
This year, the millennial generation, at 75.3 million strong, is projected to surpass the baby boom generation (74.9 million) as the nation’s largest living generation, according to population projections from the U.S. Census Bureau.
Who are they? Millennials are generally classified as people born from 1980 to 2000.
Millennials have been unfairly stereotyped by the mainstream media as slackers, stock market skeptics, and too spooked to invest in financial markets.
To win the business and trust of millennials, it’s crucial for financial advisors to understand their needs, mindset, and to communicate in a way they can understand.
Let’s examine four steps that advisors can use with millennials to help craft a winning investment strategy.
Step 1: Pay Yourself First
A common excuse for not saving and investing that millennials sometimes use is the erroneous argument that “I want to pay off my student loans and other debt before I start saving.”
Why doesn’t that logic hold up? Because eventually student debt may someday be replaced by other debt like a mortgage. And if millennials train themselves to always delay the discipline of saving and investing because they’re in debt, they’ll never get ahead.
Regardless of how much debt a millennial has amassed, they should be saving and investing a portion of their income, however tiny that income may be. What matters most is paying yourself first, starting right now, without letup over the coming decades.
Step 2: Build on a Strong Foundation