Practical analysis for investment professionals
07 March 2014

Financial Advisers: Do You Have a Strategy to Attract Millennials?

It’s hard for financial advisers to ignore Baby Boomers — after all, many are Boomers themselves. As are many of their clients. But what about Millennials, or Gen Y as they are also known? Are advisers paying enough attention to them?

A recent Nielsen report, “Millennials — Breaking the Myths,” notes that this generation is 77 million strong, on par with Baby Boomers, and constitutes 24% of the US population.

At the risk of stating the obvious, this represents a big opportunity for those brands — including financial services organizations — that truly understand Millennials’ habits and preferences. Not addressing this market segment also represents business risk. Why? Because Millennials are the clients of the future. So even though, as a group, they don’t have as much economic clout as their older counterparts, they are still a client segment that advisers should be thinking about.

Since you are all busy professionals and probably don’t have time to read the report cover to cover, we’ve saved you some time and have excerpted the bits most relevant to financial advisers.

First, let’s set the stage. Nielsen says that to truly understand Millennials, it’s important to put them in context vis-à-vis other generations. This is how Nielsen defines the generations from the past century:

  • Greatest Generation (1901–1924)
  • Silent Generation (1925–1945)
  • Baby Boomers (1946–1964)
  • Generation X (1965–1976)
  • Millennials/Gen Y (1977–1995)
  • Generation Z (1995–present)

The authors write that Millennials are “the social generation. They’re the founders of the social media movement — constantly connected to their social circles via online and mobile.” Not surprisingly, Millennials are connected and want the personal touch. “Technology defines Millennials. They sleep with their mobiles and post status updates from the bathroom,” the report says. “While interacting with companies via social media, they value authenticity — they want to feel like they have a personal, direct interaction with the brand — and in return, they’ll advocate and endorse that brand.”

The report identifies five common myths — and then dispels them. It’s Myth #3 that’s relevant for advisers:


We’re all broke


While Millennials have been hit hard by the recession, they also make up a larger percentage of those with $2 million+ in assets than Gen X.

Interestingly, Millennials are the most educated generation, as more than 23% hold a bachelor’s degree or higher, and an even greater proportion of Millennials (39%) are still in school.

Based on when they were born, younger and older Millennials differ in their economic behavior and financial expectations. “Young Millennials (1986–1995) were born into much more prosperous times than older Millennials. Older Millennials (1977–1985) were born into the recessions and austerity of the early Reagan era,” the report notes.

So what are the implications of all this for financial advisers?

“Millennials like to handle their finance themselves, primarily online,” according to the report. “Older Millennials are 28% more likely than average to buy mutual funds online. And, both younger and older Millennials are more likely than their older counterparts to engage in online trading, with older Millennials being 32% more likely than average. Also, given their techie nature, it’s not surprising that they are the heaviest Internet bankers and most likely to purchase insurance online.”

But here’s the zinger: “They’re much less likely than the older generations to have contact with financial advisers, which is a challenge for banking and investment institutions. Younger Millennials are 41% less likely than average, and older Millennials are 34% less likely than average.”

And the challenge: Millennials are less likely to have contact with financial advisers compared with their parents’ generation, yet if you do engage them as clients, you may be surprised to discover they are surprisingly savvy when it comes to investing. Northwestern Mutual’s 2013 Planning and Progress Study found that nearly a quarter (24%) of Gen Y respondents identified themselves as “highly disciplined” financial planners. (See: “What Gen Y Can Teach Boomers About Financial Planning.”)

One way to engage with Millennials is via social media. And for some practical advice on how to do this, see this blog post and the accompanying webcast: Basic Adviser Strategies for Social Media.

What else can you do to hold onto existing clients and prepare for the new, wealthy client of the future? April Rudin, CEO of the Rudin Group, offers these essentials:

  • Your messages must change to match the value propositions that are important to each generation. Most importantly, does your online presence reflect the same value propositions? If not, you need to give yourself and your firm an online facelift.
  • If you are not online, and online with appropriate messaging, you risk being “invisible” to Gen-X/Gen-Y clients. Here is why: Baby Boomers tend to ask friends for referrals and then act on the referrals. Gen-X/Gen-Y will ask for the same types of referrals from friends but will also do their own research on the Internet.

Also, think about ways you can add unique value. Financial planner Michael Kitces points out in his blog post, “Financial Planning for Gen X and Gen Y Clients: Focus on Human Capital First,” that for younger clients, their “human capital” — the ability to generate earnings from their labor — is the greatest asset on their balance sheet, and financial capital simply represents human capital that was converted to income and saved rather than spent. “From this perspective, the reality is that for younger clients, financial planners can bring significant value to the table by helping clients to enhance and maximize not just their financial capital, but also their human capital,” he writes.

Finally, it’s worth noting that over the next decade, 12,000 to 16,000 of the nation’s 315,000 advisers and brokers will retire each year, which means the financial industry will need up to 160,000 new advisers in the next 10 years to maintain the current headcount, according to Accenture. The pending retirement boom is due to the rising average age of advisers, Accenture says.

If your firm is recruiting younger advisers, be sure they have a plan for Millennial clients and prospects.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©

About the Author(s)
Lauren Foster

Lauren Foster was a content director on the professional learning team at CFA Institute and host of the Take 15 Podcast. She is the former managing editor of Enterprising Investor and co-lead of CFA Institute’s Women in Investment Management initiative. Lauren spent nearly a decade on staff at the Financial Times as a reporter and editor based in the New York bureau, followed by freelance writing for Barron’s and the FT. Lauren holds a BA in political science from the University of Cape Town, and an MS in journalism from Columbia University.

2 thoughts on “Financial Advisers: Do You Have a Strategy to Attract Millennials?”

Leave a Reply

Your email address will not be published. Required fields are marked *

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.