By now, many agents and advisors have begun to see the value of multigenerational planning. When done well, working with younger generations of clients can be win-win for everyone involved. It offers advisors an opportunity to grow their businesses in a way that is poised to last for decades to come. By welcoming new, younger clients, advisors create sustainable growth and the chance to develop client relationships from the ground up. When working with young clients, agents and advisors can play an instrumental role in building the client’s insurance and financial habits, goals and plans.
Multigenerational planning also provides established clients with an even more cohesive, comprehensive way to view their financial plans. Including heirs in estate planning conversations reinforces an advisor’s commitment to holistic financial planning and helps clients think seriously about the practical and emotional implications of their plans.
It also creates an environment for younger generations to gain their financial footing and develop good habits before they inherit assets from their parents or grandparents. In my experience, millennials are eager for useable insurance and financial advice. They want the sense of security that comes from insurance product education, financial literacy and foresight. They are looking to build a strong financial foundation even before they accumulate serious assets.
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Agents and advisors aiming to work with multiple generations need to be aware of the particularities of millennial investors. Working with them requires additional know-how and open-mindedness, but is worth the investment of your time, energy and money if done properly.
Bringing millennials to your practice
My financial planning practice has been actively engaged in trying to expand our multigenerational planning offerings for clients over the past year. I am currently in the process of hiring a younger planner to bring additional insight on how to best work with millennial clients and to provide a fresh perspective on things. We also reached out to clients and invited them to introduce us to the next generation. We offered clients the chance for us to sit down with their adult children and begin a conversation with them about their finances, from budgeting, to understanding their expenses, to basic investment strategies, insurance product choices and beyond.
For the most part, clients see the value of multigenerational planning for themselves. Estate planning is an emotional process. Clients want to make sure that their children and grandchildren will be taken care of, and they want to feel confident that their heirs have the tools and the knowledge to be responsible beneficiaries.
This past Christmas, my longtime clients gave their adult children a meeting with me as their gift. They knew that the best thing they could do for their children was help them gain confidence and begin to lay the groundwork for their financial future. They also knew that they could retire sooner and with more confidence if they could count on their children to be financially independent earlier in their adulthood.
Now, I encourage all parents with adult children to consider giving the gift of financial planning to their children. In many ways, it’s the gift that keeps on giving for both clients and their millennial children, and it enhances the trust between advisors and clients.
Millennials came of age during a tumultuous financial time, which has affected their goals, fears and instincts. (iStock)
Understanding the millennial’s financial outlook
In the process of working with multiple generations of clients, my team and I have gained quite a bit of insight into millennial investors. Considered to be those individuals born between 1981 and 1997, millennials have grown up during an interesting time financially, and that has had a distinct impact on their financial goals, fears and instincts. These younger investors have lived through two significant bear markets and the largest recession since the 1930s and have come of age in a period of generally low returns.
Despite what many people might guess, I have found millennials tend to be financially conservative. Millennials that come to my practice are concerned about budgeting, keeping a safety net of cash and avoiding debt. They witnessed their parents face hardships in 2008 and the aftermath of the crisis, from losing their homes, to taking on new debt, to tapping into their retirement savings early. As a result, millennials are eager to feel financially secure.
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To help millennials reach that goal of financial confidence, advisors must put some time into financial literacy. For many younger, next generation clients, advisors may need to go back to basics, working with them more on budgeting and understanding the basic tenants of personal finance. Help them work through their fixed and variable costs to build a budget that is realistic and helps them get into the habit of saving. Additionally, make sure they are taking advantage of 401(k) plans, if offered by their employer. Help them to see the importance of saving early and often. Illustrate the power of compounding interest with demonstrations and case studies. From there, you can start a more in-depth conversation about investments and build a foundation that will grow as their income and inherited assets grow.