Financial Planning for Millennials: How to instil confidence in the financial planning process
The $30 trillion Millennial wealth transfer
The image of the broke Millennial is about to change. Over the coming decade, $30 trillion USD1 is expected to be passed down to Millennials from their parents, in the so-called “Great Wealth Transfer.” Over the next few years alone, Millennial earning power is set to increase by 75%.2 This raises the question: how are Millennials going to manage their soon-to-be inherited wealth?
Firing their parent’s financial advisors
Data suggests many may start by firing their parents’ financial planners. Coming of age in a tumultuous economic landscape has endowed Millennials with a different set of values than those held by previous generations: they’re more likely to prioritize self-expression and self-actualization than Boomers — a shift that can result in higher ethical standards for investments, valuing professional flexibility, or opting for a lower-paying job in favour of social impact.3
This being the case, perhaps it’s not too surprising that two thirds of Millennials decide to cut ties with the financial professionals who advised their parents after receiving their inheritance.4 The financial guidance that served the needs of past generations is no longer aligned with what younger clients are looking for.
Planners must pivot to address Millennial priorities
Planners — and their employers — have a choice: adjust their service offering or risk losing major market share as Millennials leave in droves. In order to best serve this cohort, financial planners working with Millennials must be prepared to face a new set of client expectations, desires, and challenges.
Fortunately, planners can harness their advantages over fin tech platforms (namely, their understanding of human behavior) to provide invaluable services to their clients. If they do nothing to adapt, they risk losing business as the market shifts. But doubling down on their unique abilities can create stronger, longer-lasting ties with Millennial clientele.
References
- Choi, A. (2018). How Younger Investors Could Reshape the World. Morgan Stanley. Retrieved from: https://www.morganstanley.com/access/why-millennial-investors-are-different
- The Economist. (2020). Wall Street will soon have to take millennial investors seriously. The Economist. Retrieved from: https://www.economist.com/finance-and-economics/2020/10/20/wall-street-will-soon-have-to -take-millennial-investors-seriously?utm_campaign=editorial-social&utm_medium=social-organic&utm_source=linkedin
- FP Canada. (2021). Values & Priorities of Millennials in Canada: Synthesis & Application Report. FP Canada Research Foundation. Retrieved from: https://www.fpcanadaresearchfoundation.ca/media/ypqgzzjm/fp-canada-tdl-value_priorities-millennials-white_paper.pdf
- Skinner, L. (2015). The great wealth transfer is coming, putting advisors at risk. Investment News. Retrieved from https://www.investmentnews.com/the-great-wealth-transfer-is-coming-putting-advisers-at-risk-63303
- Forbes. (2022). Millennial Money: Financial inspiration and insight for a generation. Forbes Media. Retrieved from: https://www.forbes.com/feature/millennial-money/#26b0f4114799
About the Authors
Sarah Chudleigh
Sarah Chudleigh is passionate about the accessible distribution of academic research. She has had the opportunity to practice this as an organizer of TEDx conferences, editor-in-chief of her undergraduate academic journal, and lead editor at the LSE Social Policy Blog. Sarah gained a deep appreciation for interdisciplinary research during her liberal arts degree at Quest University Canada, where she specialized in political decision-making. Her current graduate research at the London School of Economics and Political Science examines the impact of national values on motivations to privately sponsor refugees, a continuation of her interest in political analysis, identity, and migration policy. On weekends, you can find Sarah gardening at her local urban farm.
Dr. Brooke Struck
Dr. Brooke Struck is the Research Director at The Decision Lab. He is an internationally recognized voice in applied behavioural science, representing TDL’s work in outlets such as Forbes, Vox, Huffington Post and Bloomberg, as well as Canadian venues such as the Globe & Mail, CBC and Global Media. Dr. Struck hosts TDL’s podcast “The Decision Corner” and speaks regularly to practicing professionals in industries from finance to health & wellbeing to tech & AI.
Katie MacIntosh
Katie MacIntosh is Lead Editor at The Decision Lab. She is interested in the intersection of behavioral science, culture, and new communication technologies. Before joining The Decision Lab, she contributed to research on the neurochemical bases of memory and the social psychology of the internet. An aspiring polyglot, she has studied a number of languages, including as an exchange student in Germany, Japan, and South Korea. Katie graduated from the University of Toronto with a Bachelor of Science in psychology and linguistics.
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