When it comes to obtaining financial advice, most millennials say that a financial advisor “must” be willing to meet with them — in person. This is despite the millennials’ well-documented love for all things digital.
That is one of the more unexpected findings to come from a new study of this generation of young adults, now ages 20-37 (also called Generation Y). The survey was conducted by the Insured Retirement Institute (IRI) and the Center for Generational Kinetics.
The study found that the large majority (87 percent) of millennials definitely want an advisor who will meet with them personally. That percentage is very close to the percentage of those in Generation X (89 percent) who said the same, and of baby boomers, 92 percent of whom also have that requirement for advisors.
In addition, when doing retirement planning, more than half (62 percent) of surveyed millennials said they would like to be walked through each step of the process.
Only 19 percent of millennials said they are likely to use a robo-advisor.
When it comes to finances, millennials “at least appear to be more like other generations than one might assume,” the researchers observed.
Don’t ignore this
Financial firms and advisors “can’t afford to ignore this group,” if they want to reach and serve the millennial market, IRI president and CEO Cathy Weatherford said in a webinar last week.
The survey covered 1,100 U.S. adults, ages 18–65, with a 10 percent “oversample” of millennials. Margin of error was 3.1 percent.
Other studies have reached different findings about millennials' views of robo advice, Jason Dorsey said during the webinar. He is chief strategy officer and lead millennials researcher at Center for Generational Kinetics.
But this discrepancy may be a reflection of differing definitions of robo, he said. “We think our data is more accurate” and reflects attitudes right now.
“The data tell me that financial advisors have an opportunity to win this generation,” Dorsey said. Financial advisors can help millennials with saving, investing and retirement planning by walking millennials through the process, bringing the human perspective to key life moments, and helping them take action, he said.
Weatherford noted that several under-40 advisors are doing just that by using holistic approaches to help clients. “They are helping with the whole picture,” not just helping clients begin a retirement plan and build on it, she said.
For instance, during a recent meeting with Weatherford, advisors recounted how they are bringing up tax issues, nudging clients to meet with a certified public account, asking clients if they have a will, and inquiring whether the client’s property insurance and other insurance is up to date, she said. Some even ask clients if they’ve had a good annual physical exam, she said.
Some people think that millennials want what is easiest and least expensive, Dorsey commented. But when it comes to their future, it’s incredibly important that they have the best that they can have.
Advisors need to “message that to millennials,” he said.
That includes taking holistic steps and showing millennials things to think about, for instance, when the stock market drops or at the birth of the next child. Hold their hands so they know they’re not alone, he suggested.
Reaching millennials is not without challenges for advisors, the study shows. For instance, only 38 percent of millennials said they know exactly what a financial advisor does.
This lack of awareness helps explain some puzzling answers that millennials gave to a survey question about when they would seek out an advisor.
The survey found that not even half of millennials would seek out an advisor for critical life events such as having a child (only 45 percent would seek an advisor then), marriage (42 percent) or getting a promotion at work (30 percent). But a decided majority would seek an advisor for more distant events such as receiving an inheritance (73 percent), being at or very near retirement (62 percent), or when their debt is out of control (61 percent).
Although advisors can help at all points, near and far, Dorsey’s view is that the industry needs to work on changing the millennials’ perceived markers for seeking an advisor. They need to encourage contact for more urgent events like marriage or childbirth, he said. These events “are more important and will happen sooner in life” than the more distant events.
More insights for advisors
Some additional insights for advisors who want to work with millennials include:
- Wanted traits: A vast majority (88 percent) of millennials rated fee transparency as an important component for working with advisors. In addition, 87 percent said the advisor must be highly rated, and 80 percent said the advisor must be a college graduate.
- A voice in the background: Two-fifths (41 percent) said they are already getting financial advice — from their parents. Mom and Dad may have tremendous life experience and may have learned about financial planning over the years, so “at least the millennials are going somewhere for help,” Dorsey commented. But this “may not always be the best place to go,” he added.
- Warren Buffett: Nearly half (48 percent) said they would like famed investor Warren Buffet to be their advisor. “So advisory preference is not just a matter of age. It also is a matter of what characteristics the people want to see in their advisor,” Dorsey said.
- Oprah Winfrey: One-third (32 percent) said they would like Oprah Winfrey, the popular talk show host and entrepreneur, to be their advisor. On her televised talk show, Winfrey listened, showed compassion and understanding, and was empathetic, Weatherford noted, adding that “soft skills like that can be of tremendous value to millennials.” Winfrey is also not seen as judgmental, Dorsey added. “She is there to help you through something.” For advisors, the message is, “take people the way they are,” he said.
InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at [email protected].
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