Millennials aren’t facing financial education issues that are profoundly different from what their parents faced, according to Veena Khanna, director for Key Private Bank Strategy.
“As they’re maturing, they want to learn the same things that you and I and others needed to learn as we matured out of high school and then into college and got our first jobs,” she said. Budgeting, cash flow management and credit management are just as important for millennials as they were for boomers and Gen X, she noted.
What millennials do with that education and how they interact with financial professionals, however, will distinguish them from their older counterparts, Khanna said. Millennials “have a different value system” from older investors, which will “drive whether or not financial advisors or wealth management firms will be able to attract and retain the millennial population.”
Millennials’ view of wealth accumulation is different from their parents’, Khanna said. “They are a generation of givers. They’re incredibly concerned about the communities they live in. They’re do-gooders […], and some of that will play into how they think about their own wealth management.”
Khanna said millennials’ impact approach to investing will also play into how wealth managers think about “what sorts of products that we go to market with, given that [millennials] have a different value system.”
Millennials also have different expectations around privacy, Khanna said. They’re more open on social media, and are more influenced by groupthink, she said, which “will force us as wealth managers to think about training and coaching them in a different way.” She believes millennial clients will “gain more from their peers in a groupthink environment. The use of social media will become incredibly prevalent for them as we move forward.”
In high-net-worth families, adult children are more likely to be driving money conversations than their parents, a survey by Key Private Bank found.
Almost three-quarters of advisors surveyed said their clients weren’t consistent in having discussions with their children about money. Two-thirds said their clients weren’t actively engaging their children and weren’t transparent when it came to financial issues.
Millennials’ reliance on their peers and general tech savviness will probably drive advisors’ engagement efforts toward social media, Khanna suggested, and “pushing out content to them as an affinity group and allowing them all to consume it together and opine on it in an open forum.”