- November 27, 2019
- Posted by: Blake Fostvedt
- Category: Brokers, Financial Planning, Financial Planning and Investment Blog, Stocks, Wealth Management
Millennials, also known as Generation Y, are individuals born between 1981 – 1996. Many millennials are currently reaching their prime working and earning years. In 2016, millennials passed baby boomers and Gen Xers and now make up the largest generation employed in the workforce, according to PEW Research Center.
Millennials face many problems that are unique to their generation –
- Many launched their careers during the Great Recession.
- Housing and Education costs have consistently outpaced inflation.
- Wage growth was significantly below the federally mandated target of 3.5% from 2010 to 2018.
This economic reality requires a new approach to providing financial advice and other types of money related assistance to millennials. Here are the ways I believe the financial industry must change to better serve millennials –
Managing Student Loan Debt
Many millennials are drowning in student loan debt. Student loans are extremely complex and it’s often very difficult to navigate the complex paperwork that accompanies student loan repayment plans. If you choose to work with a financial advisor (you should), make sure that your advisor is a fiduciary who always acts in your best interest.
Having Fee Transparency
Many financial planners do not disclose their fees until they meet with clients. Millennials want to know what the financial advice will cost them before they schedule a consultation. Start by working with fee-only financial planners, fee-only planners are registered investment advisors with a fiduciary responsibility. They do not accept fees or compensation based on product sales. Fee-only advisors have fewer inherent conflicts of interest, and they generally provide more comprehensive advice.
Providing Comprehensive Financial Services
Lack of financial education seems to be one of the biggest challenges that millennials face. Advisors can help remedy this knowledge gap by providing more than just investment advice. Some of the common questions I receive are: How much of a house can I afford? How much of a safety net should I have in cash? Should I pay down my mortgage or student loans? Should I invest or pay down some of my debts? Should I pay off my car?
Millennials are digital natives; technological solutions have become the norm. The old model of a sit-down appointment with a financial planner doesn’t work for a lot of millennials, they want everything to be online. Advisors should offer virtual meetings and the majority of the account opening process should be conducted online.
Reducing Financial Stress
There seems to be a lot of money-related anxiety in the millennial generation. This anxiety largely stems from issues that I’ve already discussed: heavy debt burdens and lack of financial literacy. There’s a huge market for professionals to step in and help relieve some of that financial pressure.
If you’re interested in speaking with an advisor that specializes in working with Gen X and Gen Y individuals, please call/text (402) 515-3382, send me a direct message, or email me at Blake@SuccessfulPortfolios.com.