The U.S. leads the pack in the percentage of older adults who have trouble paying their medical bills.
By Cyril Tuohy
Financial advisors may show no interest in chasing Generation Y clients, but it’s a move they may live to regret.
Conversely, Gen Yers may show little initiative in pursuing an advisor — of any age. It’s an oversight that many of today’s young college graduates may rue.
Remember, the No. 1 regret cited by retirees in one recent survey was that they didn’t put away enough money early enough.
Young graduates full of promise, blessed with a long time horizon and deeply in debt should be ideal prospects for financial help.
But advisors can’t make a living off puny asset volumes and so they have no incentive to chase young college grads. And so the irony: young investors with 80-year time horizons squander the very moment in their lives where they need to set something — anything — aside for the future.
Ironically, though, many Gen Yers, born during the period between the early 1980s and the turn of the century, don’t have much initiative when it comes to seeking help from advisors. At least that’s what some surveys claim.
Their excuse? Advice costs too much. Besides, why should young professionals without money and with few financial responsibilities bother with advisors? “I can use the Internet,” young investors are likely to respond.
Yes, they could. But how many really do? How much of that is an excuse to put off today what you can do in the proverbial tomorrow.
And what of tomorrow? It only takes 24 hours before tomorrow bleeds into today when the delay begins once more. As every advisor knows, though, delay a long-term financial decision and the opportunity for that dollar bill to earn compound interest is lost forever.
Generalizations about a group of more than 70 million Americans should always be taken with more than a grain of salt, of course. Extrapolations about a group so large from surveys so small — 100, or 1,000 or even 10,000 respondents — raise questions about the reliability of the data.
Still, it’s safe to say that the financial habits of Gen Yers come in all shapes and sizes. Some are savers, others are spenders.
In truth, many Gen Yers care about their finances, said Northwestern Mutual financial advisor Chantel Bonneau, a member of Gen Y herself.
Many Gen Yers are astute savers. They have to be.
In an age of exorbitant college tuition, tepid hiring and a do-it-yourself mentality foisted on Gen Yers for everything from health care to retirement financing, it would be a mistake to sell the Gen Yers short.
Recent Northwestern Mutual research “confirms what many millennials already know — we care deeply about our finances," Bonneau said.
The best advisors for Gen Yers are other Gen Yers, she said. "Who better to advise us than those with firsthand knowledge of our generation's challenges and priorities combined with an intuitive understanding of how to communicate with us?”
Gen Yers, ultimately, will have to be more than savers. They need to be investors.
It’s not enough to say you care. It’s important to act, to open an individual retirement account (IRA), or contribute to a 401(k) – at least for the employer match, for instance. With Internet-based investing, there’s no excuse for not getting started.
We live in an “age of immediacy,” and circumstances act against long-term thinking, said Greg Oberland, president of Northwestern Mutual.
“It’s easy to live in the moment and not spend time thinking about long-term implications,” he said in an interview with InsuranceNewsNet.
Oberland draws parallels between the retirement challenges of Gen Yers and the obesity epidemic. People don’t take time to think about what they eat, and many eschew exercise. Over the long term, that catches up with them.
And so it is with setting aside small quantities today in exchange for receiving larger quantities in the future. Ignore savings habits for too long and it catches up with you.
There’s hope, though. People are turning the corner of the health care side and there are signs that young investors are turning the corner on the retirement and financial planning side as well, Oberland said.
If Gen Yers are used to immediacy in their entertainment, food and answers, surely they invest for retirement — immediately.
Bonneau, who launched her career after graduating from the University of California at Los Angeles, believes financial advising will continue to grow in prominence as a career path.
Attributes of financial advising reflect what many Gen Yers value in a professional experience, she said: opportunity, flexibility and entrepeneurship.
“I can think of only a few careers that directly train you to be both a leader of business and of people," Bonneau said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
© Entire contents copyright 2014 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.