I have a confession to make. I was born in 1986. I am a millennial.
Your news sources and social media feeds have no doubt taught you to fear and despise us. We are a menace, with our hashtags, Instagrams and lack of financial savvy. Mostly it’s that last one; why bother wasting time on a generation that notoriously hates investing? Obviously it makes more sense to dedicate your time to older clients, who understand money management better and have more money for the managing.
I’m here to tell you why that’s a great way to set yourself up for failure, if you plan on being in this business for any length of time. After all, if you don’t make the effort to build a rapport with Reagan-era babies now, why would they bother coming to you after they’ve worked a few years and built up some savings?
For one thing, as in most cases, the media doesn’t have it quite right. We don’t just spend all our cash and live paycheck to paycheck. Quite the opposite, in fact: many of us have been very careful about saving a piece of everything we earn. Additionally, it’s not that we hate investing. Plenty of us would love to have our money doing more work for us. The reason for both of these behaviors is simple: we’re scared.
If you step back and take a look at the era we grew up in, it makes a lot of sense. The 90s were possibly the best economic period in American (and the world?) history, and certainly the best in recent memory. Even before that, our parents could pay their own way through college and then buy a house while earning minimum wage.
Fast forward to today, and it isn’t difficult to see why we hang on to cash so tightly. Millennials were either just starting or finishing college when the subprime mortgage crisis rocked the financial landscape. In other words, we were thrust into the “real world” just as money went from being basically free-flowing to a precious commodity.
On top of that, the reason for that change was massive corruption and lack of foresight within once-respected financial institutions. Combine that with the notion of investing, where we could lose everything and have nothing to show for it, and suddenly the millennial impulse to either hoard everything in checking or entrust our savings to an impartial trading algorithm doesn’t seem quite as crazy.
Don’t take this all for a pity-party for my generation. The reason I tell you all this is so you can understand how to sell to us. I feel a little like I’m giving up state secrets, but it’s all for our own good.
If presented properly, annuities are an unexpectedly appealing product to the skittish millennial. They provide the one thing that we’ve looked for everywhere and usually can’t find: guarantees.
No doubt, you’re thinking that selling an annuity to someone so young makes no sense. After all, they should be capitalizing on the time they have so they can max out earnings! And you’re not wrong. I don’t necessarily mean that you should be selling annuities to everyone born after 1982.
Bear in mind that financial education is a unicorn in America – it’s all but nonexistent in the school system, and unless you choose a business major in college, you’re not likely to get much of it there beyond the ability to budget for pizza and beer. When you present someone who hasn’t yet earned a stable living and has minimal savings to speak of with even something as simple as an index fund, they’re unlikely to have any basis for figuring out how it works, short of what you tell them then and there. For someone who feels like they could lose everything if they make a mistake, this doesn’t inspire a great deal of confidence.
Explaining annuities as a concept is a great way to get your foot in the door with clients who feel this way. At their core, annuities are an incredibly simple concept: Give an insurer “X” now, and receive “Y” over time for life. The simplicity of the idea can be a great stepping stone to convincing your younger clients that the vague concept of “finances” isn’t actually so complicated.
Building from that, even once you move on to other types of products and contracts, millennial clients are likely to continue to respond well to the idea of annuities. As I said, we like guarantees.
While the recent bull run in the market has eased a lot of young clients’ fears about the market, seeing the market tank so sharply at such a critical stage in life means a lot of them are still going to be very attracted to the idea of safety.
Obviously, if you are used to dealing with older clients, this approach will take some getting used to, plus a younger client is less likely to be suitable for an annuity sale – for now. A few years down the road, when they’re looking to earn some interest on their cash, though, they will remember that conversation and be much more likely to look to you for help.