Phuong Luong, an educator, financial planner and investment strategist, has introduced a column on Morningstar that focuses on what she has learned from working with clients in their 20s and 30s, as well as with clients of all ages who want to invest with their values.
“For advisors who embrace these clients, it can be a big opportunity to grow their firms and make a positive impact,” she writes. “However, I’ve spoken with hundreds of millennial clients across the country who feel like traditional financial advisors do not understand these issues.”
Here are three things Luong says the next generation of clients want from their financial advisors, and how advisors can help millennials and others.
1. Student loans are an issue across the income and wealth spectrum.
As education costs continue to outpace the inflation rate and income growth, student debt has implications for taxes, homeownership, starting a family and retirement savings. It behooves advisors working with millennial clients to understand loan forgiveness programs and strategies for managing student debt in light of competing priorities and overlapping life goals.
2. Clients want to align their investments with their values.
Many clients find it hard to align investments with values, either because their employer-sponsored retirement accounts include index funds that hold companies in problematic business lines, or in the case of those with taxable investments or inherited wealth, their financial advisors trivialize their goals of investing in nonextractive industries or don’t know how to compare sustainable investment options. Some young people just stay out of the stock market for these reasons.
These clients want help evaluating alternative, direct impact investments. Many want to invest in the “solidarity economy” to make wealth distribution and ownership more equitable.
3. Clients want to determine their “enough” and to help others have enough.
Financial advisors traditionally have the singular goal of maximizing their clients’ wealth, but this is not a meaningful goal in itself for many young people.
In a financial planning meeting, advisors are likely to hear the question: How much can I redistribute now while ensuring financial security for myself and my family?
Some clients give a fraction of their yearly income while saving for their retirement. They also provide funding to build political movements or meet emergency housing and medical needs for others. They speak of intentionally “moving” or “returning” money — rather than “donating” or “charity” — to economically oppressed communities that have for generations experienced barriers to wealth and financial security because of government policies.
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