Communicating online seems to be second nature for millennials who have grown up with text messaging, social media and online research. Younger adults seem to be tied to their smartphones. (Older adults as well: More than 90% of adults in a recent survey said they own smartphones. The survey by the Media Insight Project, an initiative of the American Press Institute and the Associated Press-NORC Center for Public Affairs Research, also found that 51% of those surveyed said they are online most or all of the day.*)
So it’s understandable that financial advisors may assume that young adults are comfortable with financial information and guidance they may find online and might not feel the need to meet with a real person. That’s not the case, according to research by the not-for-profit Insured Retirement Institute (IRI) and The Center for Generational Kinetics (CGK). The study, titled “Will Millennials Ever Be Able to Retire,” finds that 87% of millennials surveyed** said it was “important for the advisor to be willing to meet with them in person” to dispense financial advice. The study findings are presented in an IRI and Center for Generational Kinetics press release.
That may be reassuring news for advisors who are concerned about how robo-advising may affect the wealth management industry. The study found that only 19% of millennials say they are likely to use a robo-advisor in the retirement planning process. The reasons for this are not spelled out, but the finding does suggest financial advisors have a valuable opportunity to connect with millennials. Other key study findings also suggest the desire for a more personal touch. For instance, 62% of millennials surveyed said they would like financial advisors to walk them through the financial planning process.
There are challenges, however. The study says while millennials acknowledge a need for guidance, they often don’t follow the advice they may receive. And while it may be to their advantage to start the retirement planning process early in their working years, a majority of millennials surveyed (62%) said they would only be likely to seek a financial advisor when they are at or close to retirement.
And while the opportunity may be great, the survey’s findings suggest advisors have plenty of educating to do when they do meet with millennials. For one thing, millennials appear to be out of touch with the true cost of retirement. The survey found that 70% of millennials believe they will spend less than $36,000 annually when they retire. That’s 30% less per year than what retirees are spending today, on average.
What do millennials look for when choosing a financial advisor? Eighty-eight percent of survey respondents identified fee transparency. Eighty-seven percent said it was important that a financial advisor is “highly rated.” Eighty percent said they would like their financial advisor to be a college graduate.
*You can visit www.americanpressinstitute.org for more details.
** The survey was administered to 1,110 U.S. adults, ages 18–65, with a 10% oversample of millennials, ages 20-37 and weighted to the current census data. Participants were screened to be U.S. citizens. The survey was conducted online from Aug. 4, 2015, to Aug. 7, 2015, and has a confidence interval of +/-3.1%.
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