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Financial Planning for Millennials

Matt Schulte January 18, 2022

Diagram of financial planning strategies for Millennials
Updated on: April 21, 2022

In 2016, the Millennial generation (those born from 1981 to 1996) overtook Baby Boomers as the largest generation of employees in the workplace.1 They are also on deck to receive a record-breaking intergenerational wealth transfer which by some estimates is projected to be as much as $68.4 trillion by 2030.2 With the oldest Millennials now reaching their 40s, this generation is more than the future of the financial planning business—they are already a part of it.

When it comes to attracting Millennials to your financial planning practice, it’s important to understand what they’re looking for—not only in terms of their financial goals and aspirations—but also in their relationship with their financial professional.

Millennials Redefine the Financial Planning Experience

For advisors accustomed to working with older generations, there are some crucial differences to note when it comes to the financial planning needs of Millennials. According to our research3, young investors want a financial plan that balances the transactional and emotional dimensions of their lives to build a roadmap that not only leads them in the right direction monetarily but also includes:

  • Life-stage planning: Effectively preparing the client for major life events such as funding a college education, buying a house, or growing their family.
  • Value-based planning: Allowing the client’s belief system to shape and contextualize their financial priorities.
  • Total well-being planning: Threading the needle to produce a wealth management strategy that fosters long-term health and well-being.

This transition in client expectations is moving the financial industry away from a primary focus on investment advice towards a holistic approach to financial planning. Millennials often feel unprepared to manage their finances and welcome help with topics across the financial spectrum. These topics include establishing a budget, building savings for emergencies and retirement, and guidance on managing debt—elements that comprise the foundation of financial wellness.

To serve this generation, financial professionals should walk through this litany of financial hurdles with their Millennial clients and build their financial plans around the resulting conversations. Addressing each client in a customized way will establish a personalized relationship-building process that resonates more with this generation.

Further, a study of financial professionals and how they achieve fulfillment in their careers indicates that supporting their clients with a focus on financial wellness—coupled with the use of technology—leads to greater feelings of satisfaction.4 Technology provides the bridge that can help financial professionals create the personalized, holistic relationship Millennials are seeking.

Millennials and Technology

While older investors set the standard for investment practices in the past, Millennials are looking for something more when it comes to establishing a relationship with a financial professional. They are the first generation to be considered digital natives—meaning they grew up using technology. As a result, they expect a seamless digital experience when it comes to personal as well as business interactions.

When attracting and retaining Millennial clients, the use of financial technology in your planning practice is a must. In their annual Investor Insights Study, Fidelity found several ways that younger generations are transforming the advice relationship as it evolves toward greater use of technology.5

For example, these younger generations have every expectation of managing their financial lives digitally, leading 65 percent to indicate that they prefer a paperless experience and two-thirds to say that they want working with their financial professional to be as easy as working with Amazon or Uber.

The survey also found that younger generations enjoy investing and feel highly knowledgeable about it, with 34 percent sharing that they have some assets managed by a robo-advisor. Yet, in spite of feeling like they don’t need a lot of help with investing, they are high users of financial advice and appreciate the benefits of working with an advisor—suggesting the best approach with Millennials is to provide a hybrid practice that incorporates a combination of digital tools and personalized advice.5

It was also revealed that it is essential firms cater to Millennials’ digital expectations by leveraging online reviews, managing digital reputations, sharing content regularly online, and expanding their reach beyond their local area.5

Using a Digital Experience to Earn Trust

Updating to new technology isn’t something that happens overnight. It takes time, money, and patience. As firms work to get new technology in place, additional steps can be taken to support the process by working on establishing trust.

It starts by engaging this generation with personalized, human relationships that focus on their core values. There are proven ways that financial professionals can build open, trusted relationships with this generation and help them alleviate the financial stressors they face—much of which can be conveyed through the digital experience.

Millennials have shown poor long-term planning and asset management behaviors, with just 36 percent reporting that they have tried to figure out how much money they will need in retirement. And of those who have tried to figure out how much they need, 24 percent do not have any type of retirement account set up.6 Technology provides a means to deliver much-needed guidance on personal finance and healthy money management practices, as well as demonstrates your commitment to financial wellness.

By using digital channels to establish a deeper relationship with Millennial clients, financial professionals can stay in tune with the immediate needs of their clients and provide the just-in-time financial education that their clients are seeking to help them achieve financial wellness.

Technology also provides the means to communicate with Millennials using the right channels. Younger investors interacted with their advisors more over the course of the year than older investors—at 7.5 times versus 5.8 times. However, these interactions should not be confused with office visits. Digital communication is preferred and nearly a quarter of younger investors have interacted with their financial professional over social media in the last year.5

Technology in Partnership with Humanity

The use of technology in the financial services industry improves the customer experience and facilitates stronger relationships. This may seem counterintuitive, but our research shows that 71 percent of clients said technology allows their financial advisor to be authentic and connect on a more personal level, and 65 percent said it allows them to connect with their financial team in ways they wouldn’t be able to otherwise.4

Using technology within the planning process to aggregate clients’ financial data helps them visualize their situation and sets up financial professionals to take their planning services to the next level. With technology, the financial professional can focus on the human connection, establishing a personalized relationship-building process that will resonate with their Millennial clients.

You’ll find more about how a focus on financial wellness and technology can meet client needs while providing a fulfilling career in financial planning in our Planning with Purpose eBook.

Sources:

1 Fry, Richard. “Millennials are the largest generation in the U.S. labor force,” Pew Research Center, 11 April 2018.

2 Cerulli Associates. “The Great Wealth Transfer.” Cerulli Associates, 2018. https://info.cerulli.com/HNW-Transfer-of-Wealth-Cerulli.html

3 eMoney Power to the Plan Research, July 2020, Advisors n=420, End clients n=403

4 eMoney Planning with Purpose Research, July 2021, Advisors n=393, End clients n=391

5 Fidelity 2020 Investor Insights Study

6 Bolognesi, Andrea, Andrea Hasler, and Annamaria Lusardi. “Millennials and Money: The State of Their Financial Management and How Workplaces Can Help Them.” TIAA Institute, 2020. February 1. https://www.tiaainstitute.org/sites/default/files/presentations/2020-02/TIAA%20Institute_Millennials%20and%20Money_T%26I_Lusardi_02%2020.pdf.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

About the Author

As Head of Financial Planning, Matt focuses on helping clients fully utilize eMoney's dynamic financial planning tools. As one of the founding employees of eMoney Advisor, he has made significant contributions towards the feature-set definition of the platform. With over 20 years of experience in financial services, Matt and his team of Certified Financial Planners help clients implement practice management strategies on an in-depth level to collaborate and achieve business results.

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Welcome to
Heart of Advice

a new source of expert insights for
financial professionals.

Get Started

Tips specific to the eMoney platform can be found in
the eMoney
application, under Help, eMoney Advisor Blog.