Millennials: A Smart Investment for Advisors

They show traits more like their grandparents when it comes to finances

by Greg Oberland

Mr. Oberland is President of Northwestern Mutual Life Insurance company. Visit

Millennials. Born between 1980 and 2000, this group is quickly becoming the most dissected and debated generation in our nation’s history. While much has been said about their love of social media and socializing, financial discipline is not necessarily an attribute that immediately jumps to mind. However, new findings from Northwestern Mutual’s 2014 Planning & Progress Study reveal that when it comes to managing their money, this young, hip generation is more like their grandparents than either may have imagined.

The majority of Millennials surveyed (61%) consider themselves “highly disciplined” or “disciplined” financial planners, more than adults aged 60 or older (54%) and boomers (48%). Millennials’ reserved, patient approach to saving and investing further belies their age. Only a sliver of Millennials (14%) indicated that they are pursuing growth at all costs, while nearly a third (30%) opted for “slow and steady,” and an equal amount (30%) said they would prefer to be more cautious but felt they had a lot of catching up to do.

For the financial advisor community, Millennials are truly a case of the early bird gets the worm. Though they may not currently hold the lion’s share of investable assets, Millennials are undeniably the future of the nation’s economy. Approximately 80 million strong, this generation is estimated to benefit from $30 trillion in wealth transfer over the next several decades. On the flip side, they are also facing staggering student loan debt, a difficult job market and the possibility of having fewer retirement safety nets (e.g., pensions/social security) than their parents and grandparents.

These intersecting dynamics make Millennials promising prospective clients for a number of reasons. Weathering a global recession in their formative years combined with graduating into challenging economic realities has elevated this group’s appreciation for the value of financial planning in achieving present and future lifestyle goals. However, despite their head start on planning, Millennials have the appetite to do even better, with more than two thirds (68%) in our survey agreeing that there is room for improvement in how they handle their finances.

The best part? Millennials are virtually an untapped market. According to our research, only a small fraction (13%) of this segment currently works with an advisor, while 28% say they would like guidance but do not know where to find the right help. Advisors willing to invest in cultivating Millennials now can build strong, long-term relationships as these are what we like to call people of potential.

Capturing and keeping the Millennial client

Though they may share certain attitudes about money with older generations, Millennials are a new breed when it comes to winning and maintaining their interest. The following are some considerations and learnings about engaging this unique population gleaned from Northwestern Mutual’s experience and proprietary research.

Show and prove

Weaned on technology and the internet, Millennials are heavy consumers of information and tend to rely on social networks and online resources for advice. They do their homework and take little at face value. Further, the increased availability of self-directed alternatives (online trading and investing) combined with skepticism towards the financial sector raises the bar for winning confidence and credibility with some young clients. As such, advisors most likely to succeed with this group will demonstrate complete transparency as well as the ability to cut through information overload and deliver value that extends beyond easily attainable generic investor financial information and DIY platforms.

An effective advisor will have the flexibility to adapt recommendations to the client’s hierarchy of needs, even if somewhat counterintuitive to traditional financial planning best practices

It is also worth noting that communication style and tone is essential to engaging this generation. They pride themselves on their independence and achievement and want an advisor who is more partner than parent to empower them with insight while still respecting their input.

One size fits none

Personalized phones, clothing, music playlists, even work experiences – customization (and collaboration) is king with this generation. They will expect their advisor to take the time and initiative to deep dive into their unique needs, circumstances and preference, and tailor solutions that will be realistic for the lifestyle they want to lead.

In some cases, for advisors, this may mean making adjustments in their own perspective. For example, some Millennial clients may prioritize instant gratification or luxury purchase (e.g., a new car or travel) over starting a retirement nest egg. An effective advisor will have the flexibility to adapt recommendations to the client’s hierarchy of needs, even if somewhat counterintuitive to traditional financial planning best practices. Demonstrating a willingness to understand what makes Millennials tick is integral to earning the confidence that will position advisors to take the lead as their assets grow and decision-making becomes more complex.

Get wired

Millennials are rarely separated from their ubiquitous smartphones, tablets, and PCs. In fact, Nielsen research finds that an astounding 83% of Millennials admit to even sleeping with their smartphones. Technology is in the DNA of this demographic and a shaping force for their expectations around access and communication. In their 24/7 universe, waiting is a dirty word, multi-tasking is the norm and cutting edge is at a premium. Therefore, the ability to be responsive, nimble and innovative will likely be as much a metric of success as portfolio performance.

Advisors courting Millennials would be well-served to develop a fluency with virtual meetings, portals, and other technology that will make it easy for these clients to receive and share information and interact at their pace and from their preferred location. Also, as this group tends to be highly visual, they will likely value tools that graphically chart goals, progress and activity., Northwestern Mutual’s financial online resource, is designed specifically for young Millennials and includes a number of calculators, tools and other resources that you may find useful when working with this group.

The importance of digital mediums extends to a financial advisor’s own website and social media channels. Internet research is the first frontier for Millennials when considering the purchase of goods or services. If you’re “invisible” online or if your presence does not reflect value propositions that will appeal to this generation, you run the risk of losing the opportunity before it even exists.

The payoff

As the most educated generation in history and a quarter of the current population, Millennials and their impact on the future of our national economy cannot be ignored. While Millennials may be climbing the income ladder and have fairly straightforward finances now, advisors who seize the opportunity to lock down this segment’s loyalty in the present stand to see significant long-term upside as a good portion of the nation’s wealth – 10% every five years – starts changing hands during the next 15 years.