Millennials are killing businesses left and right.
I’m sure you’ve heard this narrative. The consumer tastes of the millennial generation (generally speaking, those who are between 23 and 37 right now) are causing a number of industries and businesses to topple over, lose money, and flat-out close up shop.
Honestly, you should thank us for putting some of those businesses out of their misery. Your town doesn’t need another Applebee’s to launch two blocks away from the other five that are already open.
But there’s a certain Yin and Yang to everything, and millennials are also building up new business models
Avocado farmers say hello.
(Personally, you can keep your avocado toast and give me back cereal—which is another staple millennials are killing, or have killed, depending on the day and media outlet.)
With the consumer preferences of the up-and-coming generation having such a large impact on so many industries, it’s worth looking at how financial services will fare.
Among financial advisors, there’s a perception that millennials are the “next generation” of investors (that’s jargon-speak for “important, but not quite ready for me to pay full attention to”) or that they’re all a bunch of student debt-laden liberal arts majors who still live in their parents’ basements who aren’t worth the time.
It’s important to recognize that all the millennial stereotypes aren’t true. Take a look at a few quick stats:
Millennials save twice as much as baby boomers, contributing 10% of their income to retirement savings
One out of six millennials already has at least $100,000 in savings
More millennials are budget-conscious and better at sticking to their budget than the baby boomer generation
With statistics like those, the picture looks rosy.
Still, it’s not all good for millennials and their finances. A Fidelity study found that close to half of millennials who do invest are investing too conservatively for retirement.
Even that, though, means an opportunity for financial advisors. It proves that this generation has a huge need for good, solid financial advice.
Millennial clients are a viable demographic right now. And if you continue to ignore them, then your business might be the next one they kill.
Over the next thousand words or so, I’m going to take a look at what research is saying about what’s important to millennials so you can better understand how to communicate more effectively with potential clients in this important demographic.
Ready? Here we go.
For years, advisors could get away with emphasizing how they helped their clients keep more of their money, plan for how to spend their golden years, or fund vacations and new homes or cars or college funding.
But this message will no longer resonate with the new generation of investors.
Yes, socially-conscious investing has been around for a while and it’s gone by many names before. ESG. Impact investing. Socially responsible investing.
Whatever you want to call it, socially-conscious investing is an important lens through which many millennials view the world and their part in it.
According to a recent survey, 92% of millennials said they care more about doing good than being financially successful. To put that number in perspective, only 52% of other generations said the same. That’s a huge gap!
It tells us that the narrative of why to invest has changed.
This shift is going to require a tremendous pivot in how financial advisors talk about themselves, their services, and what they do for their clients.
It’s going to require you to treat being “authentic” as more than a buzzword.
It’s also going to require that you have an answer when a client asks you to give them a strategy for building a socially-conscious portfolio. Your robo-advisor competitors have dedicated portfolios built for this purpose, and you’ve got to have a strategy as well.
Why do millennials care so much about socially-conscious investing? You don’t have to look any further than the headlines each day to understand that it’s largely related to a heightened awareness of how the choices we make each day have a larger impact on the world around us.
The U.N.’s panel on climate change recently estimated we have ten years to get global warming under control.
Millennials will be the ones living with that impact for the majority of their lives. So, ways to help make a positive difference in any way possible—including through their investments—is high on the priority list.
Clients want more interaction with their advisors than ever before. The days of talking to someone once a year at their annual review are long gone.
It’s a big reason why Redtail launched Redtail Speak, which allows advisors to text with their clients in a compliant way.
The same things that millennials want from their workplace, they want from their advisor.
Millennials seek flexibility, face-to-face time (even if it’s digital instead of physical), and they want to understand the “why” behind what they do.
All of these desires are opportunities for you to examine how your message needs to adjust to fit your new audience persona.
But don’t miss the big elephant in the room when I talk about adjusting your message: You have to mean it. It can’t be fake and something you manufacture just to win a few more new clients.
According to analysis from the Pew Research Center, millennials are better than older generations at identifying fact vs opinion in political statements.
I believe we can extend that analysis into other areas as well. So how can you use this tidbit to your advantage?
It’s simple. Speak truth. Be authentic.
Because if you don’t—they’ll know.
Let’s get down to the nuts and bolts in this next section, shall we?
Millennials want more than the intangible good vibes of working with an advisor who cares about them and shows them that they are someone they can trust.
They also want financial planning.
And if you think about it, this makes complete sense with what we’ve already seen with millennials. They want to do good for the world and the environment, and they want to work with people who exhibit that same level of care and detail in their own lives.
Financial planning is a way for millennials to engage with their investments, understand what is happening with their money, and take control by making decisions that reflect their values.
And somehow, millennials even have found a way to make financial planning seem thrilling. In a Northwestern Mutual study, almost 30% said that it makes them feel “excited and inspired.”
That’s not really something I thought I would type, but it absolutely underscores the role and ongoing importance of financial planning in an independent advisory firm.
You didn’t think that we were going to get through an entire blog about millennials without talking about cryptocurrency, did you?
Because there is just no way that could happen. It is literally impossible.
And so here we are.
I realize you might be giving me this face right now, but hang with me for a few more paragraphs. We’re almost at the end, and I promise I won’t even get into blockchain.
Look, I’m not personally an evangelist for bitcoin, or dogecoin, or whatever kind of digital currency your neighbor down the street says he’s launching.
But the point is this—whether you (or I) believe in cryptocurrency is not, actually, the point.
The takeaway is that one of your clients does believe it’s the future, and you have to be prepared to speak with an educated opinion.
If someone asks you for your thoughts on bitcoin, your answer cannot be “I don’t care about it/I don’t think it’s worthwhile” and then have that be the end of the conversation.
You are paid to be the financial guide for the lives of the clients you serve. It is literally your job to stay current with new financial products and enhancements so you can have a solid take on them.
The questions about digital currency are only going to grow. One out of every four affluent millennials holds or uses cryptocurrency right now.
Subscribe to a blog you normally wouldn’t read, follow someone new on Twitter, and read up.
Let’s imagine, for a moment, that you still aren’t sure that you want to try bringing on millennial clients.
The standard talking point in the industry is that you should bolt on a robo-advisor solution into your firm as a way to help you service younger, wealth-building clients at scale.
And you could do that. It’s a viable option, if you can handle the implementation—because technology implementations are always a wildcard, no matter how simple they seem.
But what you absolutely cannot do is nothing.
If you view mass-market robo-advisors as your main competition for millennial clients right now but also believe that once they hit a certain age or a dollar amount in their accounts that they’ll then decide that it’s time to leave their robo-advisor and call you, then you need to immediately stop that line of thinking.
Over the next ten years, the robo-advisors that survive are going to get better. Artificial intelligence is going to keep advancing, and those advancements will make their way into digital solutions. The entry that robo-advisors have begun to make into providing more human advice is going to get deeper and more robust.
And ten years from now, those inevitable technology enhancements are going to make the robo-advisor solution that much more compelling for someone who’s grown up with it and been using it for a decade.
You can’t sleep on millennial clients, and you can’t wait for them to “grow up” before you start putting an emphasis on serving them.
It may take time to implement some changes in your advisory firm, or even in your own behaviors, but don’t forget how much millennials love killing off business models that don’t innovate.
The future of your business is at stake, after all.
Looking for someone to help you refresh your marketing, create new content, or talk about serving millennials at your next event? Get in touch with me here and let’s chat.
Featured Image: Photo by Tony Ross on Unsplash