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4 Millennial Traits Every Advisor Should Leverage

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There’s no shortage of facts about millennials: Their average age is 30, nearly half are married, and their average household income is $142,000. They’re poised to be roughly 50% of the U.S. workforce by 2020 and more than 75% by 2030. But demographic data alone doesn’t tell you much about how millennials think and act.

Several studies have been done that dig deeper into the motivations and behaviors of this generation, and the results may surprise any financial advisor who thinks the door to millennials is all but shut. Here’s a look at some characteristics unique to millennials, and how advisors can modify their approaches to align more closely with them.

The “4 Ps” of Millennials

According to a Guardian Life study, this generation can be broadly defined as having the following four characteristics as they relate to investing and financial confidence:

1. Parents

They may hold views that are very different from their parents’ — millennials are more detached from institutions such as political parties and religion, as an example — but when it comes to financial planning, it turns out they want Mom and Dad involved. This could be because they know their parents always have their best interests at heart, or it could be that millennials simply don’t yet have the confidence to go it alone.

There also could be a connection between parents’ involvement and millennials’ reliance on them for cash. More than half of those over 21 are receiving financial help from a parent or guardian, in some cases for the very basics, like gas, groceries and rent.

What this means for advisors: Get a sense of how your millennial clients feel about having their parents play a role in their financial decisions; if they’re open to it, encourage them to include their parents in planning meetings or, at the very least, review what you’re recommending. Don’t miss appropriate opportunities to talk to both generations about planning for parents’ aging and the costs that may come with it.

2. Passion

Every generation is influenced by events they experience growing up, and these events shape their values.

Millennials’ interest in far-reaching social issues — the greater good — is driving their cause engagement today, with interest focused on causes that promote equity, equality and opportunity, while institutional giving (churches and schools, for example) and organized workplace giving are not as popular. For advisors, it’s important to know that millennials want to see their own values mirrored in a professional partnership.

What this means for advisors: When choosing professionals with whom to work, millennials will likely be influenced by the partner’s community involvement, philanthropic causes (particularly those involving education, health care and the environment) and their sense of community within and beyond their office culture. Highlight any “outside activities” that reveal who you and your firm are as people and as community members so clients and prospects get a clear picture of what you stand for.

3. Planning

This generation wants (and expects) digital solutions they can access on their terms — any time, any day, anywhere — because they’re all about working smarter, not harder. But they also want the added value of insights from experts, and reassurance that they’re doing the right things. In fact, millennials are more likely than any other generation to say having a financial advisor they trust is important to their financial confidence, with 82% of millennial clients saying they’d appreciate more personal meetings with their investment advisor.

What this means for advisors: People expect digital tools to conduct the business of living, and they’re using it to do everything from starting their cars and securing loans to arranging trips and looking for jobs. But while this kind of convenience and flexibility is important to them, so are you. Establish your value — and their confidence in you — by talking with prospects and clients about the relevance of your background, experiences, and successes.

4. Priorities

This generation is more focused than the previous two on short-term financial goals (like vacations) and funding the lifestyles they want today rather than on tomorrow’s retirement. Millennials are the first generation to focus on planning for financial freedom instead of retirement, with 63% of millennials putting money aside for these relatively short-term goals. In fact, millennials report that they’re “… willing to do whatever it takes to achieve freedom and flexibility, even if it means working for the rest of their lives.

What this means for advisors: To help ensure millennials’ long-term success, many advisors consider it their responsibility to use behavioral coaching to foster smart financial habits, particularly around saving and investing. But don’t entirely dismiss their desires to meet short-term goals. Helping millennials plan for that vacation can solidify their trust in you and act as “practice” for the planning needed for longer-term goals.

How millennials think and act has as much to do with their financial acumen and actions as demographics. And when advisors understand and take into account what makes this generation different from all others, they can open the door to the opportunity to serve them today and well into the future.

Elisa Garcia is business development manager at Betterment for Advisors.

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