Millennials are the first to get a financial advisor and avoid stress – InsuranceNewsNet


When Natixis Investment Managers (Natixis IM) surveyed nearly 2,500 Millennials worldwide, including more than 200 in the United States with a minimum investable asset of $100,000, they found some interesting results. For example, 75% of US millennials have a professional financial advisor, a higher percentage than Gen Xers (67%) or baby boomers (70%).

Explaining this finding, Dave Goodsell, Executive Director of the Natixis Center for Investor Insight at Natixis Investment Managers, said, “We know from previous surveys that Millennials started saving and investing earlier than Boomers or Boomers. the Xers. Now they want professional help to manage it.

“In a way, this is a generation that relies on experts to help them become better at sports as kids, experts to help them better position themselves to go to college, and experts to keep them fit,” Goodsell said. “Whether it’s done digitally with an app or in person, they follow the advice. It seems that as their finances become more complex, financial advice follows suit.

Millennials have clear financial goals

What’s more, according to the survey, financial planning is the professional advice Millennials are most interested in receiving, arguably to help them achieve what 86% consider clear financial goals, including taking their retired at age 59. Millennials are diligent savers, setting aside 19% of their income for retirement, on average. And when it comes to making investments, 42% of Millennials don’t trust algorithms or artificial intelligence.

“Millennials are starting to reach a more complicated stage in life,” Goodsell pointed out. “They are looking for advice to manage things like managing retirement savings, education savings, life insurance and taxes. These issues are specific to your personal situation. It’s hard to feel like you’ve covered the details you need just by watching a few personal finance videos on YouTube. It’s not only why they turn to advisors, but also why they seek out more comprehensive financial planning services.

Time spent with advisor considered important

The survey highlighted another area that advisors should pay close attention to: 82% of millennials consider time spent with an advisor to be important to their long-term financial success. For them, the three most important facets of the relationship are:

  1. Helps manage volatility
  2. Discuss financial planning with the family
  3. have someone who listens

So what can advisors do to attract more Millennials and help them better manage their assets? According to Goodsell, they should pay attention to the things that matter most to millennials.

Two key examples are environmental, social and governance (ESG) funds and tax management. In the United States, eight in ten millennials say they view their investments as a way to make an impact, Goodsell added.

Advisors who are familiar with ESG and who understand that Millennials not only want to align their investment with their values, but also to generate returns. Millennials are also interested in what happens under the hood of their investments and expect fund managers to be active owners, he added.

Taxes are another critical area of ​​concern for millennials, according to Goodsell. In fact, taxes are the number one financial fear of this generation. “Advisors who can help them retain more of their income through strategies like direct indexing will be able to solve a key problem,” he said.

Risk and Volatility

When selecting investments, nearly half of Millennials (48%) say risk is the most important factor they consider. They assess risk in a variety of ways, but most often define it as market volatility. In fact, volatility ranks first on their list of investment concerns, according to the survey. Three-quarters (76%) understand that sudden market swings of 10% are normal, and 67% also see it as an opportunity to grow their wealth. However, 60% see volatility as something that undermines their ability to achieve their financial goals.

Given recent market performance, now would be a good time to check in with any customer, but especially younger customers, Goodsell advised. Millennials are likely aware of what happened to markets after 9/11 and the global financial crisis, but they haven’t personally experienced that kind of volatility as investors, Goodsell said.

“Our research shows that Millennials are twice as likely to define risk as exposure to volatility (27%) than not meeting their goals (13%),” he added. “Even though Millennials say they understand that volatility is an integral part of investing, most will tell you that they would choose the safety of their assets over the performance of investments. Proactive awareness will go a long way for advisors.”

Attracting and engaging Millennials

According to Brian Haney, Founder and CEO of The Haney Company, advisors can take additional steps to attract and engage Millennials.

Market volatility can be both a blessing and a curse, Haney said. Younger generations of investors are as willing to follow a financial blogger or podcaster as they are a financial advisor. With so many millennials taking advice from unlicensed and untrained content creators and influencers, market volatility has a way of breaking down much of that advice when consumers realize it’s not working.

With clients having more real-time access to data and market information than before, the role of the advisor has evolved, Haney added. “It is no longer enough to build appropriate strategic portfolios and then engage with your clients on a semi-annual or annual basis. It is essential that counselors adopt a mindset that is akin to that of a life coach. The best advisors are masters of behavioral economics and know how to help clients emotionally, not just professionally.

According to a recent poll, Haney added, 53% of Millennials say they would rather lose their sense of smell than lose their technology. From easy-to-establish online banking, to trading your own stocks, to clicking “here” to save 15% or more on auto insurance, today’s consumer has a myriad of options. to achieve financial goals – and without the help of an advisor or professional insurance.

The challenge is to stand out from the crowd in an increasingly crowded space, Haney said. So what should advisors do to attract Millennials and keep them engaged as customers? “Advisors need to become digital influencers and deliver engaging content that draws those customers to them,” he said.

Additionally, Haney said, three keys to success are:

  • Develop a digital brand that stands out as a subject matter expert so Millennials see you differently and are as interested in connecting with you as they would a blogger.
  • Produce engaging content that helps people take one small step, not many, and inspires them to do more.
  • Understand how people feelnot just how they think, and connect with them on a personal and emotional level.

Ayo Mseka has over 30 years of experience reporting on the financial services industry. She was previously editor of NAIFA’s Advisor Today magazine. Contact her at [email protected]

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