Charleston – Millennials represent the future client base of financial advisors, and a large one at that. During the IRI Annual Meeting taking place now in Charleston, IRI issued a new report on millennials and their views on retirement planning.
The report, developed in conjunction with the Center for Generational Kinetics, found that while 68 percent of Americans aged 20 to 37 said they are saving for retirement, only 29 percent indicated they are actively planning for retirement. Even more, the study found that 60 percent of millennials believe planning for retirement is more difficult than maintaining a diet.
“This study debunks the myth that millennials are not thinking about retirement,” IRI president and CEO Cathy Weatherford said. “At the same time, it confirms what many have believed: Millennials are not doing enough to prepare for retirement. Given this need, it will be mutually beneficial for financial advisors to engage this market and position themselves as guides who can take millennials through the process.”
Other key findings from the report:
More than a quarter of millennials are banking on either winning the lottery or receiving gifted money to fund their retirement years – 15 percent and 11 percent, respectively.
When it comes to expenditures in retirement, 70 percent of millennials think they will spend less than $36,000 per year – 30 percent less than the current national average, $46,757, for those aged 65 to 74.
The majority of millennials, 56 percent, believe they will not be able to retire when they want to, with half this group thinking they will never be able to fully retire.
When it comes to working with a financial professional, 62 percent of millennials would like an advisor to walk them through every step of the retirement planning process, and 87 percent said it is important that an advisor be willing to meet them in person. Only 19 percent of millennials said they are likely to use a robo-advisor.
About half of millennials (48 percent) would pick Warren Buffett to be their financial advisor, and 32 percent would choose Oprah Winfrey. By contrast, 77 percent of boomers selected Buffett and 15 percent picked Winfrey.
Half of millennials believe they will be financially supporting their parents as they age.
Millennials are more likely than boomers and Generation Xers to cut off their children financially at age 18.
But many in the industry agree that when it comes to millennials, education is key.
As Mary Mack, president of Wells Fargo Advisors, said at the IRI Annual Meeting happening now in Charleston, “If we can capture millennials early and teach them, it accelerates the opportunity we have.”