Knowledge Transfer

For Millennials, Saving for Retirement Is Not What it Used to Be

Ambitious, plugged-in and self-sufficient…but more than ever seeking the advisor’s expertise

by Ralph Ferraro

Mr. Ferraro is Senior Vice President, Head of Product, for Lincoln Financial Group’s Retirement Plan Services (RPS) business. Drawing upon more than 30 years of experience in the retirement industry, Ferraro leads the innovation and evolution of the RPS suite of products – developing solutions that meet the needs of today’s consultants, advisors, plan sponsors and participants. Ferraro has an extensive knowledge of product development, risk management and stable value products, and provides industry-leading thought leadership on these topics. Visit

Retirement savers today face a vastly different landscape than just 10 or 20 years ago. Today’s savers are going to be responsible for their own retirement security, and nearly 80 percent say they expect their employer-sponsored retirement plan to be their main source of retirement savings.1

That’s a heavy burden for the average American saver, and provides an opportunity for financial advisors to help. Baby Boomers are retiring, and $38.2 trillion is expected to be passed from the Silent Generation and first-wave Baby Boomers to heirs and charity between 2011 and 2035.2

Some of those on the receiving end of that wealth transfer will be Millennials, who will make up 75 percent of the workforce by 2020. These savers can use the help that advisors provide, including a holistic view of a client’s finances and personalized service. Though advisors are navigating an evolving regulatory environment, their value proposition and the services they provide have never been more important.

Navigating Changing Trends

While there is significant opportunity available for advisors, they are operating in a changing regulatory environment.
The Department of Labor Fiduciary Rule has altered the way firms and advisors do business – making thoughtful changes to their business models in order to comply with the rule. While the rule fueled growth in fee-for-service models, there will always be a place for commissions. In some cases it is commission-based compensation, rather than a fee-for-service model, that are in the best interest of the consumer. Providing consumers with choices will always be critical, but as fee-for-service models have grown in response to the rule, firms have made the necessary modifications and advisors have had to adjust accordingly.

The focus on fees and transparency extends to the product realm, with more advisors embracing products that offer level-fees and transparent pricing. Many of these products also offer institutional share classes that weren’t previously available – providing additional value to advisors’ clients.

Plan sponsors are increasingly turning to advisors for benchmarking, which is not simply about fees. With more of the population responsible for their own retirement, advisors should be looking beyond just cost to outcomes. Is a plan delivering services and value that will drive outcomes for both plan sponsors and participants?

Outcomes are critical to plan sponsors, as nearly three-quarters have planned for benefits costs to rise as the result of an aging workforce.3 Many employers will have to choose from a combination of absorbing the cost into their business, passing the costs onto employees or reducing healthcare and other benefits.4

Outcomes are equally as critical to participants, as only 19 percent of Americans say they are very prepared for retirement, and three in five expect they will have to work in retirement.5 In order to effectively benchmark a plan, advisors should look at how well a provider helps increase participation and savings rates, so participants are ready to retire when the time comes.

More advisors may be expected to assist their clients with overall financial wellness. In 2016, only 29 percent of advisors offered financial wellness programs, while now 38 percent of advisors make these programs available to their clients.6

Personalized Service Sets Advisors Apart

Advisors are uniquely positioned to help their clients with their overall financial wellness, because of the holistic approach they can take around a client’s finances. Making sure clients have access to the technology they need is important, but advisors can build personal relationships with their clients – something an algorithm can’t do.
When an advisor develops a long-term, one-on-one, personal relationship with a client, they can gain perspective into their client’s life, financial situation and concerns.

Through this ongoing relationship, advisors are uniquely positioned to help their clients take action when they are most willing to make a change. For many people, major life events provide the motivation they need to look at their retirement and make a positive change. For example, 71 percent of people expecting a child were motivated to make a change to their retirement plan savings, as were 53 percent of people starting a new job.7 If an advisor has insight into when these events are occurring, he or she can reach out to their client and help guide those changes.

83 percent of Millennials with student loans say their loans have had a moderate or significant impact on their ability to meet other financial goals

Advisors can also address specific concerns their clients have, through that same holistic view. They can counsel their clients about debt, as 58 percent of people say their level of debt is a problem. Advisors can also provide sound advice about how their clients should be investing in their retirement plan, in order to achieve their financial goal. There is a strong need for that advice, as four in 10 participants say they wish they knew more about which investments to choose in their retirement plan.8 For Baby Boomers close to retirement, advisors can help them understand how to take the money they have saved, and turn that into income in retirement.

The Millennial Opportunity

As the great wealth transfer continues, there is opportunity for financial advisors to build their client base by focusing on Millennials. Millennials don’t have the breadth of financial knowledge that older generations possess, and 84 percent of Millennials seek financial advice due to their lack of financial knowledge.9 This generation isn’t just relying on technology to help them – 41 percent of Millennials want to receive financial education and guidance through a one-on-one meeting with a financial professional.10

And there are plenty of areas where advisors can provide Millennials with valuable guidance. Fifty-seven percent of Millennials are stressed about their finances,11 with contributing factors including student debt, retirement savings and competing priorities.

Student debt can be a major financial roadblock for Millennials – 83 percent of Millennials with student loans say their loans have had a moderate or significant impact on their ability to meet other financial goals.12 A similar number of this generation, 80 percent, are concerned about their retirement savings13 and 65 percent believe they are saving less than they need to be in order to be on track for retirement.14

Advisors can help Millennials understand how to balance saving for the future with day-to-day financial needs, which is particularly valuable to this generation because more than half of people between the ages of 20 and 30 who are participating in their retirement plan have five or more competing financial priorities.

Whether advisors are helping Millennials save for their future, helping Baby Boomers convert their savings into lifetime income or helping their plan sponsors clients drive outcomes, the personalized service advisors provide is more important than ever. It’s up to advisors to embrace this opportunity and help all retirement savers navigate today’s changing landscape. ◊



About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help empower people to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $246 billion in assets under management as of September 30, 2017. Lincoln is a committed corporate citizen and was named one of the Forbes Best Employers for 2017, is a member of the Dow Jones Sustainability Index North America, and received a perfect score of 100 percent on the 2017 Corporate Equality Index. Learn more at: Follow us on Facebook, Twitter, LinkedIn, and Instagram. Sign up for email alerts at
1. Willis Towers Watson Global Benefits Survey 2015/2016.
2. The Cerulli Report: Wealth Transfer: Sizing, Trends, and Opportunities 2008.
3. LIMRA Secure Retirement Institute 2015 Plan Sponsor Survey.
4. LIMRA Secure Retirement Institute 2015 Plan Sponsor Survey.
5. 2016 M.O.O.D. (Measuring Optimism, Outlook and Direction) of America Survey, Lincoln Financial Group, May 2016.
6. Cogent Wealth Reports, Retirement Plan Advisor TrendsTM, 2017.
7. Lincoln Financial Retirement Power® Participant Study, 2017.
8. Lincoln Financial Retirement Power® Participant Study, 2017.
9. Kobler, Daniel “Millennials and Wealth Management: Trends and Challenges of the New Clientele ” Deloitte, 2015.
10. LIMRA. Help Wanted? Employees and Financial Wellness Programs, 2015.
11. PwC: 2017 Employee Financial Wellness Survey.
12. PwC: 2017 Employee Financial Wellness Survey.
13. SBI 2014-15 MacroMonitor.
14. Lincoln Financial Retirement Power® Participant Study, 2017.
15. Lincoln Financial Retirement Power® Participant Study, 2017.