For better or worse, Millennials are doing things their own way. The industry is still learning about this generation, and broad observations have at times led to inaccurate assumptions.
One such example: new research has revealed that, surprisingly, Millennials want to build a relationship with their financial advisor through in-person meetings and phone calls—not through digital communication.
The study, conducted by The Center for Generational Kinetics on behalf of fintech giant Broadridge Financial Solutions, found that “only 17 percent of Millennials view texting and only 9 percent view social media as trust-building communications.”
Personal Preferences
In terms of frequency of communication, around two-thirds of the younger generation prefers to hear from their advisors on a monthly basis. A little more than one in four (28 percent) would be happiest with daily or weekly contact.
Two in three younger workers are actively saving for retirement, yet only 31 percent are currently working with a financial advisor. But that’s not to say they’re not open to it.
Over half of those surveyed (55 percent) said they’d consider using their parents’ financial advisor, but just one in five has actually met that person.
“A possible result of this lack of communication, Millennials are the only generation found to trust retirement advice from family and friends over advice from a financial professional or advisor,” Broadridge noted in its report.
Similar to older generations, younger workers said they would be most inclined to trust advisors with experience more than anything else. Aside from that, they favor advice from someone who is similar to them in terms of demographics like gender, socio-economic status and financial history, whereas older workers place less emphasis on such characteristics.
“There is an expectation that every generation differs from the one before, and that is true of Millennials—to an extent,” Jason Dorsey, president of The Center for Generational Kinetics, said in a statement. “By delineating what is specific to Millennials and what rings true for Americans across generations, we’ve uncovered significant, immediate opportunities for financial advisors to grow their practices. The key is that financial advisors need to evolve their practices starting today—and adapt along with technology and communication trends—to build trust and benefit clients and prospects.”
Choosing the Right Vehicle to Success
The younger generation acknowledges the stock markets’ potential to help them grow their wealth; however, Millennials gravitate more toward savings accounts than employer-sponsored retirement accounts, tax advantaged vehicles or real estate investments. This is not the case among older workers, who largely prefer workplace retirement plans and tax advantaged plans.
Health Savings Accounts (HSAs) are underutilized by the youth, too. While half of Millennial workers expressed interest in HSAs, only one in three are enrolled. Another 43 percent are unaware this type of account exists.
“Millennials would rather put their money in a savings account than a workplace retirement plan, effectively pushing pause on the potential for qualified plan growth,” concluded Cindy Dash, head of Broadridge’s Matrix Financial Solutions. “This demonstrates a significant need for financial guidance. The good news is that advisors don’t need to completely reinvent the wheel to meaningfully engage the next generation of clients. They just need to know and take action on what Millennials actually want.”
Jessa Claeys is a writer, editor and graphic designer.
