Sound wealth management strategies are important for everyone; however, the millennial generation — sometimes called Generation Y — faces greater challenges than any generation that’s come before them.
Millennials, those born between 1980 and 1999, came of age during one of our nation’s worst economic downturns. The deck was stacked against their future, and the level of distrust for financial institutions was unprecedented.
Today, although many millennials have families of their own, few have taken the steps necessary to implement wealth management strategies or plan for their financial future.
Millennials Face Myriad Financial Challenges
A recent study conducted by BMO Harris Bank found that more than half of the millennials surveyed reported that their personal financial situation was their life’s most pressing concern. But despite their concern, more than half the Gen Y participants indicated that their financial planning involved a simple savings account and nothing more — and only 10 percent reported having begun saving for retirement. Of this cohort, 70 percent have significant student loan debt, now averaging almost $40,000 each.
As more than 75 million U.S. residents fall into this age group, a large segment of adults may find themselves unprepared for retirement.
The researchers concluded that Gen Y will need help with financial planning and literacy soon, if they are to achieve their economic goals and be ready for the challenges of later life.
Why Do Millennials Eschew Wealth Management?
Members of this age group watched their families get financially hurt (or wiped out) by the economic downturn of 2008 and 2009, with many losing their homes to foreclosure. They watched the scandals that rocked Enron, Wall Street and other star players in the financial sector.
These experiences engendered distrust in the government, Wall Street and — most strikingly — in the banking system. In fact, 71 percent of millennials say they would rather go to the dentist than talk with anyone at a traditional bank.
While 63 percent of millennial adults don’t even have a credit card, 20 percent of them have never written a physical check.
This innate distrust of financial institutions, combined with the financial challenges faced by Gen Y, leaves most members of this age group similarly leery of wealth management professionals.
Seeking Help from a Personal Wealth Management Professional
Today, as the Baby Boomer generation (the millennials’ parents) ages out, their children will soon experience an unprecedented level of wealth transfer — almost $30 trillion, according to some estimates.
Despite an innate distrust for human financial consultants, no app or technological artifact can replace the many benefits provided by personal wealth management advisors.
Here at Divergent Wealth Advisors, we approach financial planning a little differently than many of our competitors. In fact, our firm’s founders and managing partners — some of them Gen Y members themselves — left great jobs with a global wealth management firm to found our company, because they believed they could better meet the changing needs of our clients. Contact us today to learn more about how personal wealth management can help you have a secure and prosperous financial future.
DISCLAIMER: It is important to note that this information is not meant to provide investment, tax, legal or accounting advice. This material is for informational purposes only, and is not intended to provide, and should not be relied on for, investment, tax, legal or accounting advice. You should always consult your own financial planning, tax, legal and accounting advisors before engaging in any transaction.