The Millennial generation is the first to truly grow up alongside technology. Facebook, which launched in early 2004, changed the way that people interact with each other; e-commerce made it possible to purchase anything online, and smartphones made it possible to accomplish these things from anywhere. New technologies evolved to put social connections at the core of doing business and significantly changed consumer buying behaviors.

So it's no surprise that Millennial preferences are also impacting financial advice. In this article, we will take a look at what Millennials clients are looking for in a financial advisor and how advisors can most effectively reach them. (For more, see: Money Habits of the Millennials.)

Why Millennials Matter

There are more than 15.5 million affluent Millennials living in the United States with at least $100,000 in investable assets outside of real estate—labeled Affluent Millennials—according to a recent LinkedIn whitepaper. Over the coming years, the generation stands to inherit nearly $60 trillion in personal wealth that will need to be managed. This translates into a significant opportunity for financial advisors to expand their target client market to younger audiences before the capital influx.

The whitepaper characterized Affluent Millennials as independent and open-minded optimists that are social-centric and hungry to learn. Nearly three-quarters believe that the sacrifices they make now will pay off in the future, while more than a third save the majority of their paycheck. In addition, 70% are open to using non-financial services brands for financial activities, and nearly half are very loyal to the institutions that they choose to bank with.

Surprisingly, only 30% of financial advisors are actively looking for clients under the age of 40, according to a 2015 Corporate Insights survey. Since older Baby Boomers have 22 times more assets than those under the age of 35, financial advisors that are paid based on a percentage of assets have not focused on this younger generation. But a failure to target the Millennial generation early on could be a costly mistake over the coming years.

Millennials stand to inherit a significant amount of wealth; they're also much more diligent savers than previous generations. While they may not have as many assets as Generation X right now, Millennials have seen their wealth rapidly bloom over the years as older generations are starting to spend down their nest eggs. Relationships advisor forge with Affluent Millennials early on could pave dividends down the road as the generation becomes even wealthier. (For related reading, see: How Millennials Can Be the Wealthiest Generation Ever.)

What Millennials Want 

Millennials don’t look at the same factors as Gen X when evaluating financial service providers. For example, a Gen Xer may be more prone to traditional advertising whereas Millennials tend to rely on social connections. Millennials also tend to research a company’s reviews online to identify problem areas and even see if a company’s social mission aligns with their own values—an increasingly important factor in making buying decisions.

According to the LinkedIn whitepaper, some key Millennials concerns include:

  • Does the company have a strong social presence?
  • Do they already have a relationship with the company?
  • Do any family members use the company?
  • Does the company have positive reviews online?
  • Does the company have a social mission that they align with?

A separate study by the non-profit Insured Retirement Institute and the Center for Generational Kinetics found that 88% of Millennials are looking for greater transparency when it comes to fees. These factors suggest that Millennials also tend to be fee-conscious, although they may be more concerned with transparency than seeking the lowest fees possible. In other words, they don’t want to feel like they’re being taken advantage of.

Other surveys have shown that Millennials are looking for modern technologies, such as client portals and mobile applications, to track their finances from anywhere. (For related reading, see: 4 Common Banking Habits of Millennials.)

How to Connect with Millennials

The LinkedIn whitepaper recommends several strategies for connecting with Affluent Millennials and setting up a practice to benefit from them in the future. The first step is building relationships with emerging Affluent Millennials to reach them with a compelling offer. The rapid rise of robo-advisors serves as a great model for traditional advisors in that they offer an online and mobile service with transparent fees and 24/7 access. Financial advisors should consider implementing similar technologies while building up their web and social media presence with a focus on educating Millennials about saving and investing. 

The second step is offering expert advice to establish trust and enable independence. Since Millennial clients have fewer assets, many advisors choose to outsource portfolio management to robo-advisors and focus on adding value in other areas. A great example is helping Millennials prioritizing debt payments and retirement investing, which is a hands-on service that robo-advisors can’t offer. (For more, see: Attract Millennial Clients By Focusing on Their Needs.)

The final step is creating a shared vision and executing a strategy for retirement. Often this means building a comprehensive plan for retirement and keeping it updated. Risk assessment tools can be helpful in this process in order to ensure that an investor has a portfolio with the appropriate level of risk for their situation. And quarterly updates are helpful (along with a user-friendly client portal) for keeping clients engaged and updated.

The Bottom Line

Millennials may not be the most profitable demographic for financial advisors at the moment, but they stand to inherit nearly $60 trillion in wealth over the coming years. Since these clients exhibit a strong sense of loyalty, advisors should consider targeting Affluent Millennials now in order to build relationships that last when they become significantly more profitable. The strategy outlined above can help with this process and position a practice for success in the future. (For more, see: How Millennials Use Tech and Social Media to Invest.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.