Will Millennials Disrupt the Greatest Wealth Transfer in History?

According to therapist Tess Brigham of CNBC’s Make It series, “…how stressed, frustrated and concerned they felt about their grown children needing too much financial help from them,” topped the list.

The much anticipated 25-year Great Wealth Transfer may be stalled as the Great Resignation has begun hitting the economy this year, affecting companies’ ability to effectively build out their workforce. 2020 marked a predominant increase in Baby Boomers retiring, more than twice the number of the previous year. And, these post Covid sentiments are certain to affect some Millennials’ lifestyles, especially those who rely in part on their parents’ financial assistance. Coventry Direct found that 80 percent of Baby Boomers still planned to retire at 65 even if it meant living modestly. How modestly? The median retirement savings of a Boomer is just over $200,000, a nest egg that many experts say will fall short of what constitutes financial security in the golden years.

The attitudes attributed to the most educated generation in U.S. History is more like the stuff legends are made of than true stories. While some Millennials claim they would rather rent than own, that accounts for just 12.7 percent and the responses in the survey were pre-pandemic. Last year, Pew Research released findings that 52 percent of young people were living at home. Given the closing of colleges, businesses, etc. when the study was conducted, the results aren’t too surprising. Still, it would be shortsighted not to acknowledge the distinctiveness of the Millennial generation and especially the unique bond they have with their Baby Boomer/Gen X parents.

Dr. Brenda Powell Wells, Professor and Director of the Risk Management and Insurance Program at East Carolina University characterizes Millennials as being raised “sheltered,” and “taught not to take risks.”

That interpretation may be overly broad. Although Millennials are characterized as growing up receiving trophies for just participating, it’s hard to imagine they understand “risk.” If that were the case, trophies and accolades bestowed on winners and losers alike suggests they have no real experience in risk. Risk is about taking a chance at the possibility of losing against a greater reward.

Financial advisors have been inundated with data claiming Millennials are just not interested in money or investing. Lost in the surveys and research are what this powerful group truly brings to the economy in shaping politics, embracing diversity, and breaking the social norms of their parents’ generation with women now outpacing men with a bachelor’s degree.

Millennials emerged as adults during an era of enormous technological transformation, where access to information, people, and entertainment was instantaneous and on demand. Their mindset is focused on the present, illustrated recently by a Transamerica Center for Retirement Studies® survey of generations. Asked to estimate what Millennials believed they would need to be financially secure in retirement, nearly 30 percent said $100,000 or less against an average for the group of just $300,000. A stark contrast to their parents who put that number at $750,000 (Baby Boomers) and $500,000 for Gen X-ers.

Yes, Millennials are optimistic about their future, but their attitudes can quickly be swayed by peers, social media and technology. The average attention span for a Millennial is just 12 seconds. They digitally multitask, sharing and resharing just about everything. They are influencers and projected to fare quite well in the workforce because of their technological proficiency.

Financial advisors now have an enormous opportunity to acquire this confident group by employing three key factors of communication:

• Speed
• Purpose
• Connection

The Great Opportunity

Randy Jones, Product Manager for Informa’s Zephyr has spent a career in the financial services industry and acknowledges that exceeding client expectations are the single most important component to acquiring and retaining investors.

“The next generation of investors want answers quickly and answers to different questions. Investors expect their advisor to connect with their goals and to prove it on screen or in print,” says Jones who sees Millennials as key contributors to what Zephyr calls the “Great Opportunity” era.

“Today, there exists significant opportunity for financial advisors to build a loyal, influential, and highly connected Millennial client list as they usher in a new period of original ideals and resourceful goals,” adds Jones. “They will define the way advisors interact and service the next generations.”

Zephyr launched Portfolio DNA and ESG analysis earlier this year, allowing financial advisors to construct portfolios, then create custom presentations and reports in minutes that visually illustrate ways their clients can achieve investment goals.

“The pandemic has changed attitudes about financial planning across all generational segments,” says Nauman pointing to a recent Northwestern Mutual showing double digit percentage numbers among Gen Xers, Millennials and Gen Zers who did not have an advisor pre-pandemic, but plan to work with one moving forward.

Zephyr also recently announced a partnership with Digital Financial that ensures full integration regardless of the accounting system or custodian.

“Smart technology that provides higher ROIs for our customers is the standard we use within our Zephyr platform,” says Chris Volpe, Head of Informa Financial Intelligence's Zephyr business. “Zephyr is leading the way with tech innovations that assure financial advisors and investment professionals can quickly and effectively respond to prospect questions and client expectations with confidence.”

The web-based solution offers an end-to-end workflow from client onboarding portfolio proposals, asset allocation, manager screening, and portfolio performance reporting. Zephyr’s PSN manager database is North America’s longest running database of separately managed accounts and serves as a leading resource for institutional asset managers and investment advisors.

“Investors of all age groups are interested in preparing for the future, now more than ever. We are seeing optimistic signs that point to an era of Great Opportunity for Investment Advisors.” adds Volpe. “Being able to demonstrate and verify their success is important. Their story can easily be told using Zephyr.”

tag: Strategies for Wealth Management