There's no shortage of facts about millennials: Their average age is 30, nearly half are married, and their average household income is $142,000. They're poised to be roughly 50% of the U.S. workforce by 2020 and more than 75% by 2030. But demographic data alone doesn't tell you much about how millennials think and act.
Several studies have been done that dig deeper into the motivations and behaviors of this generation, and the results may surprise any financial advisor who thinks the door to millennials is all but shut. Here's a look at some characteristics unique to millennials, and how advisors can modify their approaches to align more closely with them.
The "4 Ps" of Millennials
According to a Guardian Life study, this generation can be broadly defined as having the following four characteristics as they relate to investing and financial confidence:
1. Parents
They may hold views that are very different from their parents' — millennials are more detached from institutions such as political parties and religion, as an example — but when it comes to financial planning, it turns out they want Mom and Dad involved. This could be because they know their parents always have their best interests at heart, or it could be that millennials simply don't yet have the confidence to go it alone.
There also could be a connection between parents' involvement and millennials' reliance on them for cash. More than half of those over 21 are receiving financial help from a parent or guardian, in some cases for the very basics, like gas, groceries and rent.
What this means for advisors: Get a sense of how your millennial clients feel about having their parents play a role in their financial decisions; if they're open to it, encourage them to include their parents in planning meetings or, at the very least, review what you're recommending. Don't miss appropriate opportunities to talk to both generations about planning for parents' aging and the costs that may come with it.
2. Passion
Every generation is influenced by events they experience growing up, and these events shape their values.
Millennials' interest in far-reaching social issues — the greater good — is driving their cause engagement today, with interest focused on causes that promote equity, equality and opportunity, while institutional giving (churches and schools, for example) and organized workplace giving are not as popular. For advisors, it's important to know that millennials want to see their own values mirrored in a professional partnership.
