Millennials feel unprepared to manage their finances and need help with topics across the financial wellness spectrum. They need help establishing a budget, building savings for emergencies and retirement, and guidance on managing debt.<\/p>\n
To serve this generation<\/a>, 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 this customized way will establish a personalized relationship-building process that will resonate with these clients.<\/p>\n In 2015, the Millennial generation (those born from 1981 to 1996) overtook Baby Boomers as the largest generation of employees in the workplace. Couple this with their impending receipt of a record-breaking intergenerational wealth transfer, which by some estimates is projected to be as much as $68.4 trillion by 20301<\/sup>, and Millennials have become the future of the financial planning business.<\/p>\n While they’re anxious to do the right thing when it comes to getting their financial house in order, they’re often living paycheck to paycheck and it’s leading to significant stress.\u00a0Financial professionals who support financial wellness <\/a>for Millennials need will be able to capitalize on the enthusiasm and earning potential of this powerful generation.<\/p>\n The simplest, most effective way to begin working on financial wellness for Millennials is to start with a budget. It may not be the most exciting of activities, making it sometimes challenging to get this group on the bandwagon, but explaining how it will allow them to live life to the fullest will quickly bring them around.<\/p>\n It’s a powerful aspect of human nature that writing down goals makes them more tangible<\/mark>\u00a0and allows the writer to intellectually engage and emotionally connect with them.2<\/sup>\u00a0It’s also likely to provide insights into patterns of poor spending behavior that need to be rectified.<\/p>\n Once they’ve begun living with a budget, clients are often amazed at how even small adjustments in spending can have a big impact on savings over time. And time is on their side. At their age, Millennials still have time to get savings plans underway\u2014whether for an emergency fund or longer-term for retirement\u2014and budgeting enables them to pinpoint the most effective way to begin that process.<\/p>\n Once a budget has been established, financial professionals can help their clients determine the optimal allocation for the resultant savings. This again will require a customized approach built around the financial plan of the client.<\/p>\n Millennials are fluent with technology and there’s never been a better time to embrace the ways Fintech can assist with saving. By automating the process, clients can \u201cset it and forget it” when it comes to many aspects of their savings plan.<\/p>\n They may have an employer who has already implemented automatic contributions to their 401(k) plan. And with a direct deposited paycheck, they can automatically divert a portion of each pay into savings plans designated for emergencies or large purchases. Financial professionals can use their expertise to not only help clients understand the benefits of saving but show them the tools that will work best for them.<\/p>\n The budgeting process will also shed light on one of the biggest elephants in the room when it comes to the finances of Millennials\u2014their debt load.<\/p>\n Members of this generation had to contend with the fallout of the Great Recession as they were entering the job market. The resultant shortage of jobs and lower starting salaries delayed the income growth of these workers when they were younger, and many took on debt to compensate. In fact, federal student loan debt totals $1.57 trillion, and Millennials make up the largest number of federal loan borrowers.3<\/sup><\/p>\n Making payments on this student loan debt may be putting a strain on their wallets now, but financial professionals can help their clients by providing education and advice on how best to repay their loans\u2014student or otherwise.<\/p>\n According to a recent survey by the TIAA Institute, Millennials have also 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. Of the Millennials who have tried to figure out how much they need, 24 percent do not have any type of retirement account set up.4<\/sup><\/p>\n Additionally, the same survey found that among Millennials who have set up a retirement account, 33 percent had taken a loan or a hardship withdrawal from that account in the 12 months preceding the survey. Financial professionals can make a big impact on these clients by educating them on ways to avoid this scenario which could have a long-term impact on their future financial security.<\/p>\n It’s not surprising that an Intuit survey5<\/sup>\u00a0found that the financial stress Millennials feel tends to be much more overwhelming than for any other age group. Nearly a quarter experience financial stress every day\u2014the largest representation of any age group.<\/p>\n But there is hope. Most Millennials recognize that they need help managing their finances and that their education left them unprepared to do so. And while they are skeptical of the financial services industry because of the volatile market history throughout their lives, they place a lot of value on personal relationships. In fact, 82 percent6<\/sup>\u00a0of Millennials would even appreciate more personal meetings with their financial planner.<\/p>\nFinancial Planning Clients of the Future<\/h2>\n
Budgeting Is a Good Place to Start<\/h2>\n
Savings Opportunities Revealed<\/h2>\n
Getting a Handle on Debt<\/h2>\n
Improving Money Habits<\/h2>\n
Financial Professionals Offer Hope and Guidance<\/h2>\n