As millennials enter the next phase of adulthood, whether it’s making the decision to get married, start a family, or save for a home, you have the opportunity to help them map out a path toward those goals.
It’s not necessarily a hard sell to persuade young people to commit to a plan, especially when that plan reflects their priorities, says Alexandra Boland, financial planner at Caring for Clients in Toronto.
“I think there’s a huge interest out there in starting that process,” says Boland. “We’ve seen a large influx in that age group looking to do financial planning, recognizing that they’re young and starting to make money.”
However, to engage Generation Y, you may need to tweak your approach. That’s true even if the underlying objective of the financial plan — to save for retirement — is no different across generations.
Here are five tips for getting millennials on board with a financial plan:
1. Initiate the dialogue
Many millennials are unaware that a financial plan is critical to the investment process, says Ben Felix, an advisor with PWL Capital in Ottawa.
“They’ll have individual questions, and they don’t even know they could reduce some of their financial anxiety by doing a plan,” he says.
Felix makes it a point to introduce his clients to the process early on, so they can test various scenarios with their goals in mind.
2. Empower them with relevant information
Millennials are plugged in to a variety of sources, with each competing for a sliver of their attention. The abundance of information out there can be quite overwhelming, says Boland.
Members of this generation often seek out information on their own, she adds. “There’s much more information out there encouraging people to think about [their finances].”
It’s up to advisors to “highlight the information most relevant for the millennial, given what’s happening” at the moment, she says. For example, they can focus the conversation around setting up a TFSA, or the advantage of a homebuyers’ plan, depending on what stage they’re at.
“Advisors need to give evidence-based advice, and avoid coming across as having something to sell,” says Felix. “Millennials are used to making data-driven decisions … and advisors need to appeal to that.”
3. Set a shorter time line
Establish short- and near-term priorities, which can span one to five years, Boland suggests. With careers only in their infancy, millennials are more focused on saving for big goals in the immediate future rather than drawing income from investments as retirees would, she says.
Millennials tend to be more receptive when working with a few simple parameters, Felix says.
Boland suggests setting a monthly or yearly savings target. “Saving for retirement isn’t going to mean much because it seems like a distant objective,” Boland says.
4. Leverage technology and visuals
Make use of simple visualizations to help your younger clients envision their plan, Felix says. He uses financial planning software that builds situational models and enables him to walk through various scenarios with his clients.
5. Check in at least annually
Revisit the action plan together once a year to account for any major life changes, such as a job promotion, significant windfall from a parent or buying a home.
Boland suggests the best time to meet is at the start or end of the year, to see if your clients have progressed in reaching their targets. It’s an opportunity to “fine-tune the budget,” to take stock of what expenses need trimming to align with their goals.
This is the first part in a three-part series on dealing with millennial clients.
Next: Engaging them through social media.
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