How to build your business with Millennials
Born between 1980 and 2000, Millennials are the latest generation to take over the job market, estimated to comprise half of the American workforce and 75 percent of the global workforce by 2020.1 They’re making money, but not necessarily saving. Even though they have 25-45 years to go before the traditional retirement age of 65, Millennials are far from being prepared. And despite being open to meeting with a financial professional, most have not. This presents a great opportunity for you to grow your business.
What have they done to prepare?2
While Millennials are thinking about retirement often (62 percent are thinking about it more than once a year), they may not be doing enough to retire in the lifestyle they want. Here’s why:
- Just over one half of Millennials are currently contributing to a 401(k) plan or other workplace retirement account.
- Only 15 percent are saving toward a calculated goal or following a written retirement plan.
- Only 18 percent have put savings into an annuity
Finding Millennial prospects
It seems obvious that Millennials will need the help of qualified financial professionals to fully prepare for the retirement they want. However, financial professionals may not be sure how to find or connect with them, believing that Millennials are more drawn to technology (i.e.: roboadvisors). Recent IRI studies show that this generation is more than willing to turn to a financial professional for help and in fact, 87 percent cited “meeting in person” as a requirement they would have when utilizing the services of a financial advisor.3 However, only 34% have sought the help of a financial advisor.2
So, it looks like you need to seek out Millennials instead of waiting for them to come to you.
Here are a few ways to find them:
- Ask your clients with Millennial children to invite their kids to meetings. After all, 9 in 10 Millennials are open to using their parents’ financial advisors.2
- Tap into your current book of business to ask for referrals. More than 6 in 10 would most trust a financial advisor used or recommended by family members or a trusted friend.2
- Network at events that Millennials will attend. Connecting with them personally may help them trust you professionally.
Getting down to business: Meeting with Millennials
When you’re ready to sit down with a Millennial prospect, here are a few things to consider:
- Explore their definition of retirement. Millennials see the world very differently than past generations. That includes retirement. For this generation, retirement often means freedom, above all else. Specifically, the freedom to decide whether or not to work or how much to work. With this said, I would caution you not to assume this is the case for your prospect or client. Ask the question and really listen to the answer. Like past generations, you may find that some want a more traditional retirement, especially if they’ve seen their parents successfully retire, some want a retirement that means working forever in a career they love, and some want something completely different.
- Uncover their risk tolerance. Only one in five Millennials consider themselves “high risk” investors, and only 22 percent would invest in a financial product that offers a high potential return but carries a substantial risk of investment loss.2 That means, most of this generation will need investments that are a bit more tempered, and encourage them to save more without risking too much. Find out where they fall in their risk-return spectrum, before you start taking about investments.
- Find out how they’re saving now. Many in this generation are contributing to a 401(k) but don’t have a goal or plan. For those that are contributing to a 401(k) or other retirement account, encourage them to save at least enough to get an employer match, if one if offered. For those who aren’t or don’t have access to a 401(k), see if they are eligible for a 403(b), 457(b), traditional or Roth IRA. You’ll also need to consider that many are using their disposable income to pay off student loans, so you may need to have a discussion with them that includes how to save while paying off debt.
- Ask what you can do. Millennials often have a reputation for wanting to DIY. However, many are interested in getting help calculating retirement savings goals, paying off debt, creating a retirement plan, as well as determining appropriate investments. Ask them if they’ve created a budget, how that’s going (if they have one), and if they have a plan for generating lifetime income from their assets once they retire. Find out what they’re willing to talk to you about and prepare ideas to guide them on the right path.
- Give examples of long-term savings potential and compounding interest. With so many years left before retirement, Millennials may not be thinking about saving for the long-term. Especially when there are so many things they want and need right now. However, by showing them how compounding interest works and the benefits of saving early and often (even if you don’t have a lot to save), you may open their eyes to the benefits of a long-term approach to saving. After all, the sooner they start, the more they can save.
Annuities are long-term financial products designed for retirement purposes. In addition, annuity policies have limitations and a charge for withdrawals in the policy’s early years. For costs and complete details, contact your Equitable Advisors financial professional. Equitable Financial Life Insurance Company (NY, NY). Distributors: Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI and TN) and Equitable Distributors, LLC. Equitable Life Insurance Company, Equitable Advisors and Equitable Distributors are affiliated companies and do not provide legal or tax advice.