The millennial generation, also called Generation Y or Gen Y, is perhaps the most highly researched and highly talked about generation in all of history.
There is truly no shortage of statistics about this generation born between 1981 and 1996, according to Pew Research. With all of the noise, however, sometimes it is hard to cut through the clutter and uncover the real truths about this popular demographic.
While there are certainly many facts about millennials, uncovering the myths about millennials is very important as this generation often gets a bad rap and they really shouldn’t.
These myths are especially important to debunk as they relate to the financial services industry as a whole. Financial advisors need a better understanding of this significant client base and must separate fact from fiction.
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They Do Not Prefer Robos
One of the biggest myths we often hear about millennials in the financial services world is that they prefer to work with robo-advisors because they grew up in a digital world. Interestingly, research indicates that many millennials do not even know what robo-advisors are.
According to research from the FINRA Education Foundation and the CFA Institute, more than 30% of millennials said they have never even heard of robo-advisors, even when a definition was given and examples of robo-firms were provided.
As a matter of fact, the same report said that a mere 16% showed strong interest in using robo-advisors. This is definitely not what we have been led to believe as an industry.
A separate study from Accenture indicated that 64% of millennials said they prefer a blend of robo and human investment advice. This might allow us to extrapolate that human interaction is still of utmost importance to millennials and this is simply not what we typically hear.
While they did grow up in the digital age, this has not replaced their desire for relationships and face-to-face communication. Research states that 58% of millennials actually prefer to work face to face with a financial advisor.
In other words, to attract millennial clients, financial advisors should not mistakenly push technology hard. Also be sure to emphasize the human element and personalized approach of your advisor-client relationships because millennials prefer a hybrid investment advice model.
They Are Very Satisfied With Their Advisors
Though we frequently are told that millennials are skeptical of financial professionals, the previously cited research from the FINRA Education Foundation and CFA Institute showed that, of those working with a financial advisor, 72% of millennials are either very or extremely satisfied with their financial advisor.
Millennials also said that they want a financial advisor who acts like a teacher and will educate them, and who will customize their approach and demonstrate the importance of their needs. It is important to keep these desires in mind when working with millennial clients and prospects.
They Are Individuals
We have been erroneously led to believe that millennials share the same values, beliefs, feelings and attitudes. All millennials are not the same and they should not all be lumped together as one large group.
While they are the largest generation, they are also the most diverse. They are individuals and should be treated as such. The key is to personalize and individualize your approach and services as much as possible. A generic, one-size-fits-all approach is a huge misstep with millennials. They want to know you are putting their interests above yours and that you truly understand what makes them tick.
They Have Good Money Habits
Yet another myth we have been led to believe is that millennials are spendthrifts. Infact, research shows the majority of millennials have good money habits.
According to a report from Bank of America, 63% of millennials are saving and 54% are budgeting. Furthermore, 67% of millennials who have a savings goal stick to it each month and 72% of millennials who have a budget stick to it each month.
Contrary to what we often hear, they are also saving for retirement. According to a TransAmerica Center for Retirement Studies report, 71% of millennials are saving for retirement in an employer-sponsored retirement plan and/or outside the workplace.
They have solid money habits, are saving for retirement and, therefore, they need your advice and expertise. They want to learn. Mentor and coach them. Millennials are looking for a financial professional who is more of a teacher than a friend.
The Bottom Line
There should not be a negative connotation surrounding the millennial generation. We must redefine erroneous perceptions and debunk the myths about millennials so we can start truth talking and begin building stronger relationships with this crucial market segment.
By tailoring your services to the real needs and wants of millennials, you will reap the rewards from this often misunderstood, yet highly sought after, generation.
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