Help Wanted: Millennials Push For Professional Financial Advice

Workers using professional financial advice to invest for retirement ticked up slightly last year -- driven by demand from millennials who are getting older, a new survey found.

Of all workers who use advisors, most do so to get retirement investment recommendations, general financial planning and help calculate a retirement goal, the survey by the Transamerica Center for Retirement Studies found.

“It’s very exciting to see an increase in millennials who indicate they are using financial advisors,” said Catherine Collinson, president of the Transamerica CRS.

With overall retirement household savings on the rise, millennials have more to manage, she said.

Many millennials, a group about 80 million Americans born between 1979 and 2000, are into their 30s and paying more attention to financial planning and goal setting as they save for a home and start families, Collinson said.

So while older baby boomers may own the lion’s share of assets, it’s millennials who are generating the demand for advice.

The survey found that in 2017:

• 42 percent of millennials used an advisor, up from 36 percent in 2016.
• 37 percent of Gen Xers, those born between 1965 and 1980, relied on an advisor, down from 39 percent in 2016.
• 40 percent of baby boomers, folks born between 1946 and 1964, relied on an advisor, flat compared to 2016.

The percentage of millennials relying on professional advice rose steadily over the past five years. The percentage of boomers and the percentage of Gen Xers doing so remained more or less flat.

Survey data was compiled from 6,372 U.S. workers, ages 18 and older, and data was collected between Aug. 9, 2017, through Oct. 28, 2017. All of the workers worked full time or part time at for-profit companies with five or more workers.

Firm Size Yields Disparities

The survey also revealed a gap between workers at small and large companies, a gap that has persisted over the past several years.

• 45 percent of workers investing for retirement and employed at small companies used an advisor last year.
• 33 percent of workers at large companies used an advisor last year.

Employees at small firms show more interest in using advisors because these workers are more willing to take every advisory opportunity presented to them, knowing that small companies don’t always offer benefit plans, Collinson said.

Many workers at small companies don’t benefit from employer-sponsored retirement plans and may be motivated to find advice on their own outside of the company, she added.

The small business retirement plan market is diverse, and advisors often extend services beyond benefits and into basic retirement planning for individual employees more readily than advisors at large companies, she said.

Life and Long-Term Care

Millennial workers prefer employer-sponsored life insurance benefits more than they did a few years ago, and they also value long-term care benefits to an even larger extent than older workers, the survey found.

That young workers are attentive to the complement of products available via the workplace beyond major medical is encouraging, Collinson said.

Millennials who witnessed the Great Recession a decade ago are acutely aware of what their parents went through, she said.

They also entered the workforce with more debt than previous generations and put off getting married and buying homes – to which many are now getting around to – so millennials want to protect what they’ve worked hard to build, she explained.

Adding to their debt burdens and head of household responsibilities, millennials are becoming de facto unpaid caregivers to an aging parent, or two, who never had long-term care and that might account for their interest in long-term care.

“Everyone is concerned with runaway medical costs and major medical insurance covers that, but very few are protected in terms of long-term care costs,” Collinson said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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