The Elements

By Ironstone   |   April 11, 2016

Do Millennials Need Your Help Managing Their Money?

Categories: Millennials, Niche Marketing, Operational Effectiveness

Millennial Minute

Editor’s Note: This is the first installment of a monthly blog by Ironstone team member Nicole Anglace that will discuss all things “Millennial”, as well as the contributions Millennials can provide to the financial services industry, both as clients and employees.

Don’t overlook Millennials as clients. There are several factors that make Millennials desirable:

  • We have debt (think student loans)
  • We will soon be entering the prime of our careers
  • We want to build credit
  • We want that fancy house with the nice yard
  • We want to travel
  • Many of us want to get married

Help Millennials solve their problems now, and you’ll be creating clients for life.

Millennials make up the future of the workforce. However, it is a common perception that we lack sufficient finances and our financial issues aren’t complex. Some industry experts feel that Millennials are not yet attractive clients for independent financial advisors because issues faced by Millennials are not complex enough to be worth such a professional’s time.

However, I disagree. Instead of being hindrances, I think that Millennial financial issues actually represent reasons why Millennials both need help and should not be overlooked as a potential client base. The following issues underscore the need for such an association:

  • We don’t know what we are doing with our money
  • We have debt
  • We have both short-term and long-term goals
  • We don’t know who to trust when it comes to financial advice

What Money?

According to a January 2016 PWC report, a fair portion of my generation (~30%) overdraft their checking accounts. This same report indicates that nearly half of the surveyed Millennials don’t believe that they could afford to pay $2000 in the event that an emergency arose in the next month. This fact is surprising given that 86% of Millennials claim that they are actually saving money, and 20% of those saving money do so in the event of an emergency.

millennials_chat

It is likely that the documented inability to cover emergency expenses may be a result of improper budgeting, or a lack of a fully functional financial plan. In a January 2016 report Facebook reports that 52% of Millennials say they do not know how to go about creating a financial plan.

Debt

Debt is a major concern for Millennials, not only those with student loan debt.

This fact isn’t surprising as PWC notes that 2/3 of all Millennials carry at least one source of long-term debt, and roughly 1/3 of the generation, even those without college degrees, have more than one source of long-term debt.

Additionally, PWC reports that 53% of Millennials carry credit card balances in the past 12 months. As PWC puts it, Millennials are “financially fragile.”

Goals

As the Millennial generation spans two decades (1980s-early 2000s), it is not surprising that we are not all focused on the same goals. Generally, younger Millennials (typically those who are between 20-30 years old) are more inclined to focus their attentions on short term goals. On the other hand, older Millennials place a greater emphasis on long-term opportunities.

Short-term Goals: 43% of Millennials indicated to Facebook that their top priority is paying off debt. Roughly the same percentage of Millennials (46%) characterize financial success as being debt free. To many Millennials, reaching this level of success feels like a daunting task, especially because paying off student loan debt isn’t our only goal—we want to do other things (travel, own a car, maybe even pursue another degree).

Long-term Goals: Most Millennials don’t properly invest in their savings. According to the Facebook IQ study, the main reasons for this underinvestment stem from the belief that not only do we not have enough money to invest properly, but also that we don’t know enough about investing.

PWC points to the fact that only 36% of Millennials have a retirement account established. Sadly, even this financial security is often compromised as 17% of those with such accounts have had to take a loan from them and 14% have taken hardship withdrawals all in the last year. Chances are, the average millennial doesn’t have a solid grasp on the function/benefit of a Roth IRA over a traditional IRA.

Advice

For these individuals, the most valued source of information for all things is the internet. When we have questions, we turn to our family and peers. Unfortunately for financial advice seekers, only 24% of Millennials demonstrate basic financial literacy.

iStock_000025394995_Small

Chances are, the peers who are offering advice aren’t properly informed. Due to this lack of knowledge, the majority of Millennials (53%) admit that they don’t have anyone to turn to for financial advice. Moreover, only 36% of Millennials talk to their parents about money.

Considering the lack of reliable information, it is rather shocking that the percentage of Millennials who would consult a financial professional isn’t higher. According to PWC, in the last year a total of ~39% of those surveyed consulted professionals: 27% sought savings/investment advice and 12% sought debt management advice.

However, the total is most likely even lower, as the report does not mention the percentage of individuals who sought both kinds of advice.

3 Ways to Help Millennials

The most effective way to help millennials is to have advisors who can empathize with the life stages and transitions we are going through—people who have recently gone through these themselves. Beyond hiring employees from the Millennial pool, Facebook suggests:

1. Offer Millennials solutions that address our pressing needs and help them manage multiple financial priorities (e.g., paying down debt vs accumulating savings).

2. Make credit a strategic tool that gives financially responsible and goal-oriented Millennials the flexibility to achieve their short-term goals faster and build the credit they’ll need in the future.

3. Make financial planning a gateway: Helping Millennials develop a financial plan now will not only provide them with a much-needed service, but it will make you a more valuable partner as you open their eyes to new financial opportunities.

Millennials need your services. I know I would find such advice beneficial, and that many of my friends would as well. I recommend that you consider taking steps to add Millennials to your client base. Above all else, hiring Millennial workers is the most effective way to attract Millennial clients.

But more on Millennial workers later…

 – Nicole Anglace, Ironstone

 


Ironstone
Practice Management

Ironstone is a learning and development consultancy with business acumen that translates across many industries. Our focus is on practice management strategies in order to enhance and improve both business and personal life. We support professionals who want major and comprehensive improvements that look at all aspects not just an isolated area for change. Ironstone has identified 4 key performance areas known as the Fundamental 4™, which are required to design, develop, and sustain a successful business.


Leave us a comment, get our blog posts delivered by email, or email the Ironstone Team.

Post a Comment

Your email address will not be published. Required fields are marked *

We would love to hear from you!

  • This field is for validation purposes and should be left unchanged.

Contributors

Andrea Schlapia
Organizational Development and Human Capital
Connie Deianni
Mentoring and Employee Engagement
Guest Blogger
Practice Management
Dr. Heidi Maston
Organizational and Educational Leadership
Judith Bowman
Business Protocol
Laura Garfield
Idea Decanter Co-Founder
Mighty 8th Media
Strategic Partner
Nicole Anglace
Special Projects
Ruthann P. Lacey, P.C.
Elder and Special Needs Law
 Scott D. Calhoun
Legal Counsel
Sharon Gottula
Idea Decanter Co-Founder
TailorMade
Strategic Partner
Ironstone
Practice Management
close

Contact

Thanks for your inquiry!

We will be contacting you shortly. In the meantime please feel free to connect with us on social media and explore our blog posts.

Ironstone understands the importance of protecting your privacy. We will not sell, rent or give your name or address to anyone.

Latest Blog Article

Reflections on the ‘Fearless Girl’ Statue from a Fearless Girl

If a photograph is worth a thousand words, seeing the Fearless Girl statue bravely facing off against the powerful and iconic Wall Street Bull certainly doesn’t disappoint. When I first saw this photo, it immediately brought several powerful words to mind. Fierce. Strong. Empowered. Determined. Seeing her inner strength as a confident youngster was very […]

Read More>