When it comes to millennials and finance, the portrayal of America’s up-and-coming generation has, in recent months, been decidedly mixed.
In a Lincoln Financial survey, 60 percent of millennials (ages 18 and 34) said they were not “in control and confident” in their relationship with money. Less than 1 in 10, a survey of GoBankingRates.com found, has more than $10,000 in savings.
Conversely, a separate Bankrate.com report reveals that millennials are least likely to dip into retirement funds prematurely (only 8 percent did so over the past 12 months). And, compared to Gen Xers and boomers, millennials are more likely to say their financials improved during the past year (40 percent say they’re better off and just 11 percent say they’re doing worse).
Now comes a new survey on business owners that renders an optimistic image of millennials among the entrepreneurial class. The February 2016 Principal Financial Well Being Index reveals that 9 in 10 millennial business owners use a financial professional. That’s a greater proportion than Principal found among Gen Xers (79 percent) and boomer-age business owners (71 percent).
For advisors serving business owners, there’s also this happy statistic: more than half of millennial business owners turn to an advisor for guidance on business/employee benefits planning (27 percent) or just employee benefits planning in conjunction with personal financial planning (also 27 percent). An additional 36 percent of these millennials use an advisor for personal financial planning only.
“Millennial entrepreneurs aren’t trying to do it all — and that’s leading them to be successful,” says Amy Friedrich, senior vice president at the Principal Financial Group. “They recognize their strengths in running a business, and aren’t afraid to bring in the right people to manage the rest.”
Given the widespread use of advisors among young entrepreneurs, it’s perhaps not surprising that so many of them express, or disclose performance measures, and have taken steps that reflect greater optimism about their financial outlook and the health of their companies than do peers in older age brackets. Consider that:
More than 8 in 10 millennial business owners (83 percent) have added staff during the past year, compared to 66 percent of Gen Xers and 49 percent of baby boomers.
Over half (51 percent) of millennial owners say their businesses are growing, compared to just 35 percent of Gen Xers and 36 percent of boomers.
Millennials (48 percent) are significantly more likely than Gen Xers (31 percent) and boomers (23 percent) to add benefits in the coming year.
More than three-fourths (78 percent) of millennial business owners think their business financials will improve in the next 12 months. That compares to only half (54 percent) of baby boomers and 65 percent of Gen X owners.
The survey adds that millennial business owners are also more likely than older peers to avail employees of workplace benefits, including insurance products, over the next 12 months. These include:
Life insurance (30 percent of millennials vs. 22 percent of Gen Xers and 9 percent of boomers).
Disability income insurance (20 percent of millennials vs. 16 percent of Gen Xers and 7 percent of boomers).
Health insurance (25 percent of millennials vs. 13 percent of Gen Xers and 6 percent of boomers).
Critical illness insurance (21 percent of millennials vs. 15 percent of Gen Xers and 5 percent of boomers).
Executive benefits (21 percent of millennials vs. 11 percent of Gen Xers and 5 percent of boomers).
The business optimism prevalent among millennials may also help to explain why they’re working fewer hours than older colleagues. Their work week averages out to 38.8 hours, significantly less time than the clocked by Gen Xers (47.8 hours) and boomers (47.1 hours).
“Millennials are demonstrating they’re a new driving force as business owners,” says Friedrich. “They’re making their mark and doing it in their own unique way. As we watch these trends play out, we’re likely to see a shift, and we may need to adjust to accommodate their style.”
“Between working fewer hours, more growth and higher optimism, millennial business owners are a force to be reckoned with,” she adds.
For its February 2016 survey, Principal Financial polled 600 business owners nationwide who own at least 5 percent of a U.S. company with 10 to 500 employees and are actively involved in company management. The Index is part of a series of quarterly studies commissioned by The Principal Knowledge Center examining the financial well-being of American workers and business owners, as well as advisor opinions and practice management.
See the slides beginning on the next page for additional highlights from Principal Financial’s Well-Being Index (click on images to enlarge).