Financial Planning for Millennials: How to measure financial happiness
Set to inherit nearly $30 trillion in the next 25 years from their predecessors, Millennials are about to become the recipients of the largest intergenerational wealth transfer in history.1 As Baby Boomers steadily move into retirement and begin to pass down assets to their children and grandchildren, those who grew up in the digital age will need ample guidance in managing their wealth.
Most Millennials don’t want their parents’ advisor
Nearly 66% of Millennials express intent to fire their parents' advisors after they receive their inheritance.2 Millennials cite a lack of connection with their parents’ trusted guides, sometimes in addition to a preexistent, established relationship with their own financial gurus.3
But it doesn’t have to be this way: advisors can capitalize on Millennial eagerness to work with a financial professional. Four out of five (79%) Millennials have a greater desire to work closely with a financial professional, if they have one, compared to 59% of Gen Xers and 18% of Baby Boomers.4 In order to retain those accounts, financial planners need to engage effectively with Millennial clients - who have different needs from previous generations.
One of their priorities? Happiness.
Self-determination theory acknowledges our motives
Self-determination theory (SDT) is a framework that posits we experience optimal well-being when our three fundamental psychological needs of autonomy, competence, and relatedness are met. SDT can provide an effective means to cater to Millennial inheritors in a personable, need-enhancing way.
As we move away from a period characterized by worsening mental health (which was massively exacerbated by the COVID-19 crisis)5 people are seeking ways to enhance their livelihoods and protect their health and happiness. Financial health, especially among Millennials who have borne the brunt of the mental health crisis,6 is of particular importance.
Financial independence is highest on the priority list for Millennials. And it’s not just our research that has found this to be the case - in other literature on generational conceptions of personal happiness, Millennials marked successful individuation from parents as their top priority.7
References
- Hall, M. (2019, November 11). The Greatest Wealth Transfer In History: What’s Happening And What Are The Implications. Forbes. Retrieved from: https://www.forbes.com/sites/markhall/2019/11/11/the-greatest-wealth-transfer-in-history-whats-happening-and-what-are-the-implications/?sh=6762ef1b4090
- Skinner, L. (2015, August 7). The Greatest Wealth Transfer In History: What’s Happening And What Are The Implications. Forbes. Retrieved from: https://www.forbes.com/sites/markhall/2019/11/11/the-greatest-wealth-transfer-in-history-whats-happening-and-what-are-the-implications/?sh=6762ef1b4090
- Polyak, I. (2017, December 12). To hang on to boomers' assets, advisors must court their kids. CNBC. Retrieved from: https://www.cnbc.com/2017/12/11/to-hang-on-to-boomers-assets-advisors-must-court-their-kids.html
- AIG Life & Retirement Study Shows Americans Setting Renewed Focus on Financial Security and Planning. (2022, January 27). Bloomberg. Retrieved from: https://www.bloomberg.com/press-releases/2022-01-27/aig-life-retirement-study-shows-americans-setting-renewed-focus-on-financial-security-and-planning
- Moccia, L., Janiri, D., Giuseppin, G., Agrifoglio, B., Monti, L., Mazza, M., ... & Janiri, L. (2021). Reduced hedonic tone and emotion dysregulation predict depressive symptoms severity during the COVID-19 outbreak: an observational study on the Italian general population. International Journal of Environmental Research and Public Health, 18(1), 255. Chicago
- Hoffower, H., & Akhtar, A. (2020, October 10). Lonely, burned out, and depressed: The state of millennials' mental health in 2020. Business Insider. https://www.businessinsider.com/millennials-mental-health-burnout-lonely-depressed-money-stress
- Shrestha, S., Hendrickson, J., Gomez, G., Vasquez, J., & Bavineau, J. (2018). LIFE, LONGEVITY AND THE PURSUIT OF HAPPINESS. Innovation in Aging, 2(Suppl 1), 120.
- Manganelli, L., & Forest, J. (2020). Using Self-Determination Theory to Understand when and how Money Buys Happiness: a Cross-Sectional and Intervention Study. Applied Research in Quality of Life, 1-26. Chicago
- Carver, C. S., & Baird, E. (1998). The American Dream Revisited: Is It What You Want or Why You Want It That Matters? Psychological Science, 9(4), 289–292.
- Moccia, L., Janiri, D., Giuseppin, G., Agrifoglio, B., Monti, L., Mazza, M., ... & Janiri, L. (2021). Reduced hedonic tone and emotion dysregulation predict depressive symptoms severity during the COVID-19 outbreak: an observational study on the Italian general population. International Journal of Environmental Research and Public Health, 18(1), 255. Chicago
About the Authors
Rebecca Mestechkin
Rebecca Mestechkin is a Peace Corps volunteer stationed in the Dominican Republic, dedicated to designing transformative initiatives for youth empowerment. Previously, Rebecca served as a pre-doctoral research fellow at the Meyer-Chabris Lab at Geisinger Health, where she specialized in judgment and decision-making related to research and health care. Her research primarily focuses on patient attitudes to AB testing, as well as comparative effectiveness of different approaches to informed consent. Rebecca also contributed to The Decision Lab as a behavioral insights fellow and content creator, exploring the intersections of behavioral science, economics, and psychology. She holds an undergraduate degree in economics and political science from McGill University.
Dr. Sekoul Krastev
Sekoul is a Co-Founder and Managing Director at The Decision Lab. He is a bestselling author of Intention - a book he wrote with Wiley on the mindful application of behavioral science in organizations. A decision scientist with a PhD in Decision Neuroscience from McGill University, Sekoul's work has been featured in peer-reviewed journals and has been presented at conferences around the world. Sekoul previously advised management on innovation and engagement strategy at The Boston Consulting Group as well as on online media strategy at Google. He has a deep interest in the applications of behavioral science to new technology and has published on these topics in places such as the Huffington Post and Strategy & Business.
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.
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