Much has been written about how the millennial generation behaves, but there has been little written about how they make decisions. In many publications you will see words such as “entitled,” “dependent,” and “broke” interlaced in a narrative about a generation that reacts to what is in front of them. With such fanfare why would anyone want to pursue them? After all, they have no money, well not right now…. The largest transfer of wealth in United States history is estimated to occur between the baby boomers to the millennials in the next 10 to 20 years. As the boomers distribute their wealth to the millennials, they will gain an added boost of financial prowess; this places a greater emphasis on where they will do business in the future. For financial services firms, this means acquiring millennials as clients.
By partnering with a financial services firm we set out to answer two questions: What are the values of the millennial generation and do they have similarities to that of the boomers? And what would be needed to engage them to make smarter decisions with their money?
By conducting a survey and reviewing empirical research we were able to identify millennial values that overlapped with those of the boomers, and yet how each demographic defined them differed. The first one was family. The boomers defined the value of family as caring for their parents and providing for their children, while the millennials defined family as receiving guidance from their parents. The second value was achievement. Boomers viewed this as success and as the mentality of “keeping up with the joneses.” Millennials perceived achievement as exposing themselves to experiences, which also lead to a greater emphasis on higher education.
While the value of achievement shows willingness to grow, the overlap of family is particularly interesting. For one, it shows that millennials value parental advice more than previously thought. It also shows that what could be perceived as dependency is in fact more of a guidance-based behavior. With the role of the boomer-parent playing a greater advisory role in the millennial-child life, there is a potential opportunity to leverage the conversations at home to engage them in financial planning.
Planning, particularly goal-based planning, is something that is infrequently used by the millennial generation as a whole. Due to developmental and environmental (technology) influences that millennials have experienced, a greater emphasis has been placed on instant gratification. This mentality has even been labeled in popular culture as “YOLO” (you only live once). With that in mind, what we found through our research is that millennials can’t achieve their goals without a plan any more successfully than baby boomers can. What is needed is a planning mentality.
This planning process begins with engaging your clients in an intergenerational planning. Millennials trust their parents for advice. By encouraging your clients to bring their conversations with their children from the home to your practice it will help facilitate not only the planning conversation for millennials, but also increase the probability of retaining them as a client. While more research is needed, this lays a framework on how to approach millennials and their parents.