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Stereotypes about millennials say they are lazy, entitled brats who want to prolong childhood well into middle age, like the 30-year old in upstate New York whose parents recently sued to get him to move out of their house. While that story made for a great headline and was carried by news outlets around the world, it doesn’t represent the habits of an entire generation. As the parent of a gainfully-employed member of that demographic, I know that story is an extreme one. After all, Mark Zuckerberg is a millennial too.
Still, I was surprised to discover that, as a group, millennials are better prepared for retirement than their baby boomer parents. At least according to J.D. Power’s 2018 Group Retirement Satisfaction Study.
The study reviewed participants in retirement plans, so the guy who didn’t want to leave home wouldn’t be included. But of millennials who have jobs with 401(k) plans, more than half have set specific retirement goals and 83% say they’re on track to meet them.
Millennials Have More Money Than You Think
And even though many have crushing student loans to repay, more than 60% of millennials have at least $25,000 in retirement savings and 27% have more than $100,000 saved, with 30 years or so before retirement. Only three-quarters of boomers rapidly approaching retirement have more than $100,000 put away, with the average boomer hitting 65 with less than half the 10 years current income used as a common rule of thumb.
Millennials are also expected to inherit a significant portion of the estimated $30 trillion wealth transfer that will take place over the next few decades. Understandably that makes financial services firms very interested in capturing this demographic, but they’ll have get over another millennial stereotype to succeed.
Technology Is Not Enough
Sure, it seems like millennials were born with a smart phone fused to their hands and could text before they could speak, but technology is not the key to winning their financial loyalty. Another J.D. Power survey found that the key for financial firms looking to attract and retain millennial assets wealth is not new technology or mobile apps, but cultivating great relationships and getting personalized advice from a human being rather than an algorithm.
That’s important because it doesn’t take much to get millennials to move their business elsewhere. Almost one-third who say they are the most highly satisfied with their current full-service advisory firm will still consider leaving within the next 12 months, while only 4% of older generation investors indicated an intention to switch firms.
Communication is Key
That’s not to discount the importance of technology, which is simply table stakes with this generation. Young investors are most likely to want to switch firms when advisor communication fails to meet their expectations with self-service mobile tools. By contrast, when advisors communicate frequently and effectively, and show progress toward goals, millennial likelihood of switching drops to just 17%. Social media and other digital channels are a great way for financial firms to build credibility and a deeper level of trust with current and potential clients.
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Consider Social Video
Investors in every demographic group, even retirees, respond to advisor communications digitally—social media, texting and video. It comes as no surprise that millennials are most comfortable with these formats and have a much higher degree of satisfaction when their advisors use digital communication channels. Social media videos are a great way for firms to reach this audience with their message. They don’t have to be complicated or expensive, just accurately reflect the firm’s brand and message.
The digital world has made advisor/client contact easier and more immediate. It’s no longer enough to send out quarterly reports or schedule an annual face-to-face meeting. Communication must be ongoing and use all available channels. The firms that can master these practices are the ones best positioned for sustainable success. Especially if they are targeting millennials with money.