By Cyril Tuohy
When it comes to financial advice, could Generation Y turn into the great hybrid generation, a group of Americans who like their software and their hardware but prefer their technology connected to flesh-and-blood?
Perhaps. Consider this:
Generation Y, born between 1980 and 2000, has grown up with huge amounts of school debt, credit card debt, auto loan debt and – for those who could afford a home — housing debt. They need budgeting help — lots of it. That makes them receptive to advice, and to talking to people who can help them with their particular circumstances.
Millennials cherish family or extended family networks, according to the 2014 Gen Y Advice Matters Survey conducted by TIAA-CREF. In fact, millennials rely heavily on networks of friends and colleagues, college and graduate school contacts, and, of course, online social networks.
That makes members of Generation Y particularly sensitive to making connections with people they know and with whom they feel a connection.
As many as 70 percent of Generation Y respondents said in the survey that they turn to their family and friends for advice on financial issues, 45 percent look to their employer and 17 percent turn to social media.
Nor do they like to be sold — advisors who “push product” are not welcome. Millennials, who have an affinity for conversation, seek discussion about what they need and what they want.
“We don't believe that online advice is going to be the be-all and end-all going forward,” said Simon Roy, president of Jemstep, a Los Altos, Calif.-based registered investment advisory firm that uses advanced technology to provide investment advice to the mass affluent directly and in partnership with advisors.
“At times, individuals want to have high-touch support, to look someone in the eye” — especially when circumstances change due to life events, Roy told InsuranceNewsNet.
Indeed, despite all the talk about Generation Y seeking to connect to the world through machines and virtual realities, surveys reveal a countervailing strain that makes members of Generation Y ideal prospects for the hybrid financial advisor model that blends technology with the human touch.
“Gen Y gives new meaning to the term connected,” Kathie Andrade, executive vice president and head of individual advisor services at TIAA-CREF, said in a news release. "It's important for them to access financial advice via multiple platforms.”
In a recent TIAA-CREF survey, 55 percent of respondents said their first choice for receiving financial advice was through face-to-face discussion, although that number showed a decline from 65 percent in 2012 as more millennials chose online advice as their first choice.
Still, for a generation with approximately 80 million people, that’s a lot of respondents seeking advice from flesh-and-blood advisors.
“There's something to be said about human connection and personal touch,” said Amy Podzius, director of the field consulting group at TIAA-CREF and herself a Generation Y member. “That's never going to go away.”
Podzius said the trick for millennials is to “allow others to let you take them down the path of education.”
At TIAA-CREF, retirement investors are encouraged, with the help of online tools, to start early and contribute often. “We say start here and then sit down with somebody,” Podzius told InsuranceNewsNet.
Financial advisors will have to wait and see which model or models eventually work best for Generation Y. But perhaps the only certainty about millennials making their way into the working world is that they love an intermediary.
Whether the preferred “middleman” is a finely crafted piece of electronic hardware, intuitive budgeting application software, or a sober face-to-face discussion with an advisor about future goals, Generation Y prefers to communicate using multiple platforms.
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 protected].
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