11.21.18

Save the Millennials (From Savings)

Compounding interest. Stock market gains. As a financial professional, you know the value of these things, but new studies show that there’s an entire generation that isn’t as informed.

According to a Broadridge survey, millennials prefer savings over retirement accounts. The study found that 66 percent of the millennials surveyed are more confident using savings accounts than workplace retirement plans, tax-advantaged plans, or real estate.[1]

Why is this?

It could be because of their parents. A PNC survey revealed that nearly two-thirds of millennials said their parents taught them how to save money, but not how to plan for retirement and build their wealth.[2]

Another study, this one by Guideline, found that Millennials’ retirement accounts are underfunded compared to Gen Xers at the same point in their lives — by several percentage points.[3]

Millennials are missing out on the opportunity to grow their retirement savings through market gains.

It’s time to save millennials … from savings. Here’s how to reach them.

Two-thirds of millennials said their parents taught them how to save money, but not how to plan for retirement and build their wealth.

Meet Millennials Where They are

Face-to-face meetings build credibility and are the best way to get to know your clients and their needs, but work to meet millennials where they are. Millennials are tech-savvy, digitally inclined, and prefer casual environments. If they don’t have to have an in-person meeting, they won’t (but to be compliant, you need that face-to-face meeting).

So, instead of your office or a dinner seminar, try a coffee shop or a co-working studio. And when it comes to technology, Skype video chats or FaceTime can help millennials learn from within their comfort zone.

Educate Them

The best way to help millennials is to show them a different way. Inform them on how they can build their wealth, and explain to them how it all works. Millennials probably haven’t been taught or told how to plan for retirement, so take it back to the basics and lay it out for them. Parents of millennials have taught them how to save well, but now it’s time to put those habits and well-stocked savings accounts to good use.

By informing them, you’re also building loyalty and credibility. Your millennial clients will realize that you know what you’re talking about, and will look to you to help them with their retirement strategy.

Parents of millennials have taught them how to save well, but now it’s time to put those habits and well-stocked savings accounts to good use.

Don’t Ignore the Risk Profile

Speaking of retirement strategy, you can appeal to the millennial savings-mindset by discussing some lower-risk options. While every individual is different, the appeal of savings is the security, so be prepared to talk about options that help bridge the gap between savings and riskier options. Think of this like easing them in to the retirement planning waters. You start by getting their feet wet, before helping them go deeper into the water.

Good News and Bad News

Ultimately, there’s good news and bad news here. The good news is that millennials are saving and have put money aside for future needs. The bad news is that it’s sitting in a savings account, instead of in their retirement strategy. But we can work with that. Showing them the benefits of planning effectively for retirement is doable, and can help lay the foundation for a long-lasting client base for your business.

Sources

  1. Broadridge. “Millennials Most Confident in Savings Accounts and Want More Personal Communication, According to National Broadridge Study.” 2018.
  2. PNC. “Millennials’ Parents Encourages Them To Save, Not Invest: PNC Investments Survey.” 2018.
  3. Guideline. “Millennial Money: Beyond Avocado Toast.” 06 Sep. 2018.

Note: For Financial Professional use only, not for use with the general public. #18-0804-101819

A version of this article was originally published on the Brokers International Blog.

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