Make way for the next generations: financial advice for young adults

When Thomas Kopelman entered the financial services profession, he soon realized that there was a large segment of prospects who needed his help — but they weren’t retirees.

“Everybody works with retirees,” he recalled. “I don’t know anything about retirement. I also can’t relate to retirees.”

But Kopelman did relate to young adults and their financial questions.

“I asked myself how I could work with people like me, with people who are going through the exact same things that I was going through — you’re going to get married, you have student loans, you have kids, maybe you’re going to start a business, maybe you’re going to get equity compensation. There’s a lot going on when you’re in your late 20s, in your 30s and in your early 40s.”

Kopelman co-founded AllStreet Wealth, with locations in Indianapolis and Kansas City. He describes his firm as “the opposite of what you think of when you hear the term ‘financial advisor.’”

He told InsuranceNewsNet he believes the financial services industry “wasn’t built around serving young adults.”

“I saw it as more like ‘Hey, let me sell you an insurance product or let me put you into an investment account, and that’s going to solve all your problems,’” he said. “But in reality, it doesn’t. Young adults have all these big decisions they need to make, and they have nobody who really can help them.”

The young adults of today have different financial circumstances than their parents did at the same age, Kopelman said.

“Their parents had lower student loans — or maybe no student loans at all. They worked at the same job for 40-plus years, they had a pension plan, everything was more affordable for them,” he said. “And most young adults’ parents don’t know anything about money, so they have no one to go to for advice.”

Millennials and Generation Z are pushing baby boomers and Generation X aside to become a force to be reckoned with. Millennials represented 35% of the total U.S. workforce in 2023, with 56 million people, according to Deloitte, and the cohort is expected to grow to 75% of the workforce in 2025. Gen Z is entering the workforce in growing numbers and is expected to make up 30% of the U.S. workforce by 2030.

And these young adults recognize their need for help with securing their financial futures.

The 2023 Insurance Barometer Study by Life Happens and LIMRA revealed that nearly half of Gen Z adults (49%) said they either need to get life insurance or increase their coverage. Nearly the same percentage of millennials (47%) said the same. And they are ready to take action; 44% of Gen Z adults and 50% of millennials say they intend to buy life insurance this year.

Helping them take the first steps

Kopelman said young adults need term life insurance and disability insurance but have more of a need for planning. They often don’t know how to take the first steps, and they don’t know how to hold themselves accountable for following through on their plans.

Although Kopelman has several clients he works with on an ongoing basis, his firm offers three different fee-based planning models that clients can choose to work with over a shorter time frame.

The first — which costs $1,500 — gets a client in to AllStreet Wealth’s financial planning software, and Kopelman spends two hours “really diving into the client’s information, getting a good understanding of where they are.

“I start to educate them on some of the things they should do, and then I create a financial plan and send it to them with a video explaining those things.”

The next model is for clients who want to get started working with a professional and want to take a do-it-yourself approach after they have compiled their plan but need to be held accountable along the way.

“We start out with a get-to-know-you meeting where we make sure we’re a good fit,” he said.

“Then we have a second meeting to discuss what’s important to the client — their short-term, midterm, long-term goals and what their values are. After that, we have what we call our ‘get organized’ meeting, where we go through all their data and get an understanding of why their finances are the way they are, what their company benefits are, what their taxes look like, what insurance they have in place, whether they’ve started estate planning, what their cash flow is.”

About three or four weeks after Kopelman’s firm delivers the client’s financial plan, they schedule what they call the accountability meeting. “The goal of that meeting is to check whether the client did their homework or whether they have any questions about what they need to do to implement the plan,” he said.

The third model is for clients who want ongoing help. Kopelman’s firm meets with these clients quarterly to discuss issues ranging from tax planning to estate planning.

Tweeting for clients

Just as young clients don’t want to get advice the same way their parents did, they don’t want to find an advisor the same way their parents did. Kopelman attracts most of his clients through Twitter, using social media to educate prospects on the financial issues that matter to them. He is also an avid blogger and podcaster.

Kopelman said he is careful not to use social media to sell. Instead, he positions himself as a subject matter expert and said he wants to nurture prospects along their financial journey.

“It’s really about educating people and being relatable,” he said. “I want people to think, ‘He explains things really well. He doesn’t ask for anything.’ So that when they do need help, you’re the advisor they feel they have to reach out to. That’s the goal of all my marketing.”

Young clients want advice — and are willing to pay for it

Forget the stereotype of young adults living on ramen noodles while saddled with student debt. Millennial wealth has risen faster than that of any other generation over the past five years, and advisors should begin to look at this demographic seriously as a viable market, according to a 2022 Cerulli Associates report.

Cerulli estimates millennials had an average net worth of more than $278,000 in 2021 — an average yearly increase of 23.1% since 2016, which is the highest growth rate of any generation.

Millennials are raising families, buying homes and advancing in their careers. This generation is looking for formal financial advice and planning to best manage their affairs as well as to ensure their retirement goals are on track.

The research finds that 59% of millennials identify as advice seekers — those who want more financial advice than they receive currently, are interested in new ideas and are willing to pay for that advice.

Cerulli also found that younger generations stand to inherit substantial wealth over the next two decades. Cerulli projects that wealth transferred through 2045 will total $84.4 trillion — $72.6 trillion in assets will be transferred to heirs, while $11.9 trillion will be donated to charities.

More than $53 trillion will be transferred from households in the baby boomer generation, representing 63% of all transfers. Silent generation and older households stand to transfer $15.8 trillion, which will primarily take place over the next decade.

What are the takeaways for advisors? Chayce Horton, a member of Cerulli’s wealth management team, said Cerulli researchers asked high net worth advisors how to build relationships with the next generation and found the top recommended strategy was “to put the onus on the clients and their spouses, to bring their children into the relationship.”

“Nobody knows the clients’ children better than clients do. So it’s imperative to put that onus on the clients and also to do so right off the bat in a relationship. Rather than waiting until clients are in the later stages of their relationship with their advisor to be able to do that, it’s important to try and establish a household relationship instead of a one-to-one relationship rather quickly after establishing a relationship with a client.”

Listen to their story

But not every young adult wants to work with their parents’ advisor. Taven Sparks said successfully attracting and serving young clients often boils down to being able to relate to the needs of a younger generation.

Sparks is a private wealth advisor and partner at Sparks Financial, a Northwestern Mutual agency in Denver, Colo. His team comprises advisors from their 20s up into their 50s and serves multiple generations. About one-third of his clients are in their 20s and 30s. “Their careers are starting to take off, and they are looking for advice on holistic wealth management planning,” he said.

Sparks said he obtains most of his young clients from referrals. He finds most young adults fall into one of two camps.

“Some are working with their parents’ advisor, and that parents’ advisor is probably in their 50s or 60s and may be out of touch with the needs of the younger generation,” he said. “And some young adults want to do this themselves, and they often don’t know what they don’t know.”
Sparks said his work with young clients starts with building a firm financial foundation.

“We might start with budgeting, balance sheets, understanding their company benefits, helping clients understand the right protection that needs to be put in place — life insurance, disability insurance. Setting up that strong foundation allows us then to dive into the wealth accumulation phase for our clients once they get that foundation set.”

The best approach to begin working with a young client, Sparks said, is “to really listen to their story, their wants, their needs.” Giving clients the ability to perform many functions online is also appealing to young adults, he said.

Young clients are thinking about retirement, but not necessarily in the way their parents did, Sparks said.

“I would say that there are two types of younger clients — one that wants to work forever because they love what they do, and one that wants to retire tomorrow,” he said.

Sparks said his firm brings together an insurance planner, an investment manager and a financial planner to help young clients with all aspects of their retirement planning.

“When we’re able to analyze the investment plan with the insurance plan with the financial plan that actually tells us where we might be off on our assumptions of retirement, it is a huge eye-opener to our younger clients,” he said. “It shows them that they need to start planning earlier.

And that if they want to retire at 55 or 60 years old and they’re going to live another 30 or 40 years, they will need to make sure they understand the impact of starting to save for retirement early.”

Young adults might think that the life insurance they have through their employer is all the coverage they need. Sparks said the COVID-19 pandemic spurred many young clients to think about how to integrate life insurance with their overall financial planning.

“COVID-19 made young families realize they need to get protection in place in case something happened to them. But I’ve seen research about how the integration of permanent life insurance can play a role in long-term retirement success. And after discussing this with my young clients, they often will end up incorporating life insurance — whether term or permanent — into their financial plan.”

Helping them fit the pieces together

Jamie Clark’s clients come to them “when they are trying to figure out something big or something new in their lives; they’re not quite sure how to put the pieces together.”
Clark is a financial planner and founder of Ruby Pebble Financial Planning in Seattle, where they specialize in working with young adults who work in the technology industry and are LGBTQ+.

Some of Clark’s clients are first-time investors, and many of those clients are saving and investing to buy their first home in the pricy Seattle real estate market.

Other clients have been managing their finances on their own but want Clark to reassure them “that what they’ve been doing is the right thing.”

“Many of my clients want a partner to help them navigate all of the different pieces and figure out all the steps of what they need to do,” they said.

Young adults are more likely than their parents to move from one employer to another during their careers, so Clark frequently is asked to help those young clients figure out what to do with the money they have accumulated in multiple 401(k) accounts. Many of Clark’s young clients receive stock compensation and need help planning for the tax consequences of that compensation.

Clark also advises their young clients about their need for life insurance and discusses whether the disability insurance they have through their employer is sufficient for their needs. “These things are usually not high up on a young adult’s list, but it’s something they need to think about,” they said.

An increasing number of Clark’s clients choose not to mingle their finances with their partner’s finances, something Clark said is different from the way their parents’ generation handled their money.

“I think there are times when that makes complete sense, and it totally works fine,” Clark said. “I tell my clients not to use that as an excuse to not talk about money with their partner. I tell them to be transparent and communicate about money with their partner.”

Clients find Clark through Google search or social media, but Clark said investing in a robust website that promotes diversity when they began their firm was a good investment.

“I believe a lot of firms do not like thinking about diversity,” they said. “Who you want to serve starts with everything you put out there. If the pictures of the people on your website don’t look like someone who wants to work with you, they won’t want to talk with you. On my website,

I’ve been careful with things such as making sure we have gender-neutral colors, and I don’t talk about working with specific genders. I just want people to feel that I will respect the pronouns they want me to use and I will respect anyone who wants to work with me.”

Clark advised any financial professional who wants to work with young clients to invest in technology and “be accessible.”

“But also be yourself. I believe a lot of younger clients are picking you as a financial professional because they realize they need your expertise. And they want to work with someone they want to connect with and talk with as part of the process.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].