Chapter 7
Millennials
2015 was the year that the Millennial generation surpassed the Baby Boomer generation as the largest living generation in the United States.1 By comparison, Generation X is not predicted to outnumber the Baby Boomer generation until 2028. The sheer size of this generation underscores the magnitude and impact Millennials will have not only as consumers but in our workplaces and our society.2
Born between 1980 and 2000, these Americans are estimated to number 75 million to 80 million. When immigration projections are factored in, the Millennial population is estimated to peak at 81.1 million by 2036. The Census Bureau projects that the Gen X population will peak at 20 million individuals fewer than this, reaching a mere 65.8 million in 2018.
Sheer size is only one factor generating the attention paid to this generation and why they may indeed be the most important generation our society has yet encountered.
- 2015 marked the year that Millennials became the largest generation in the workforce, with more than one in three workers identifying as Millennial.3
- Millennials are our country’s most important customer segment, accounting for $1.3 trillion in direct annual spending, $430 billion of which is considered discretionary and nonessential spending. It also does not include the spending this generation’s influences of their parents and grandparents.4
- Millennials are the most educated generation in our country’s history to date. Sixty-one percent of adult millennials have attended college compared to 46 percent of the Baby Boomer generation.5
- Millennials are the most racially diverse generation. They are described as a transitional generation, with 43 percent of Millennial adults identifying as nonwhite, which is the highest percentage of any generation.6
- Millennials were born into an era exploding with new technology and new media, and as a result technology has always felt like a natural and necessary part of life, not something they need to adopt. Their childhood experiences with technology labeled them Digital Natives and informed what they expect in nearly all instances—from making purchasing decisions to education and work—and companies have been trying to understand and adjust to their preferences ever since.
- Millennials understand their influence on brands, governments, and institutions. They’re using their optimism and belief that they can change the world to do just that.
A generation of this size and influence becomes an easy one to stereotype. In our desire to understand how to adapt our businesses, build personas, qualify their needs, and learn how to structure our offerings to serve them, we deeply risk overgeneralizing. Like our work with women, and our proclamation that “women are not a niche,” it is important to recognize that this rings true for all of our customer segments.
In our work with women, we showed that women are not a niche; they are 51 percent of the demographic. But, within the women’s demographic are many important niches: women as wealth creators, widows, business owners, same-sex couples, and so on.
It’s important to do the same for the Millennial generation. While we can make some broad generalizations based on the moments we described earlier that have informed their generational views and perceptions, we must be certain not to overgeneralize.
The Boston Consulting Group (BCG) identified six Millennial segments that are worth considering as you develop client and prospect personas and experiences for these clients in your own business. We’ve considered the BCG model and have added on some considerations of our own that may appeal or make your business offering more relevant to each segment.
Table 7.1 uses BCG’s names for market segmentation groups and applies them to the advisory industry.
| Segment | Traits | Advisor Strategy |
| Hip-ennial: “I can make the world a better place.” | Cautious consumer, globally aware, charitable, and information hungry Greatest user of social media but does not push/ contribute content Female dominated, below-average employment (many are students and homemakers) | Investing strategies like social finance may have an appeal to this client. Frame conversations around helping these investors properly protect and grow their wealth while pursuing social objectives that are meaningful to them. |
| Gadget Guru: “It’s a great day to be me.” | Successful, wired, free-spirited, confident, feels at ease Feels this is his best decade Greatest device ownership, pushes/contributes to content Male dominated, above average income, single | Consider bolting on a robo or online service model to your existing advisory services. High-tech delivery of personalized, data-driven, automated advice, and online tools at lower fees may appeal to this segment. |
| Millennial Mom: “I love to work out, travel, and pamper my baby.” | Wealthy, family-oriented, works out, confident, and digitally savvy High online intensity Highly social and information hungry Can feel isolated from others by her daily routine Older, highest income | Be sure to engage her in the financial planning process. Reflect in her unique needs and responsibilities in her individual or family plan. This includes planning and protection for living longer, unexpected life events, education and opportunities to save for children’s college, and ensuring any lingering student debt is addressed while she saves for her future and family’s well-being. |
| Clean and Green Millennial: “I take care of myself and the world around me.” | Impressionable, cause driven, healthy, green, and positive Greatest contributor of content, usually cause related Male dominated, youngest, more likely to be Hispanic, full-time student | Social finance may have an appeal to this consumer. Before they can invest in meaningful ways, help them sketch out a plan for paying down their debt, understanding their expenses, and planning for major purchases such as a wedding, car, or home. Build engagement with this client by teaching and offering tools to support budget management and share the peace of mind that comes with good financial habits. |
| Anti-Millennial: “I’m too busy taking care of my business and my family to worry about much else.” | Locally minded, conservative Does not spend more for green products and services Seeks comfort and familiarity over excitement/ change/interruption Slightly more female, more likely to be Hispanic and from the western United States | This client may resemble Gen X more than any Millennial stereotype. Aim to be more business-as-usual and respect their boundaries and desire for fewer distractions. While generational stereotypes suggest that this generation would embrace companies connecting with them over social media, a recent survey by BNY Mellon shows that the majority of Millennials prefer to reserve social media channels for interacting with friends and family.7 Your effort may be more rewarded by speaking to their needs around preparing a budget, balancing career responsibilities with enjoying life, and building an emergency savings plan. |
| Old-School Millennial: “Connecting on Facebook is too impersonal. Let’s meet up for coffee instead!” | Not wired, cautious consumer, and charitable Confident, independent, and self-directed Spends least amount of time online, reads Older, more likely to be Hispanic | If the Anti-Millennial more closely resembles Generation X, then the “Old-School Millennial” may relate to you more like their Boomer parents than others typical of their generation. Regardless of how they identify, most Millennials are heavily influenced by and have close relationships with their parents. Millennials tend to view their parents as their “go to” advisors and the people they trust for information and advice on most areas of their life, including financial matters. Designing strategies that connect Boomers and their children for educational sessions and client appreciation and engagement events is a smart idea. |
Source: Market segments and traits come from Boston Consulting Group.
Generation Smarts: Working with Millennial Clients
Millennials are often accused of being overprotected, overpraised, and micromanaged by their parents and teachers. For most of their life, this generation lived in a bubble created in part by their Baby Boomer parents, and the sheer luck of being born and raised in good times. In fact, until the Great Recession of 2008, life was good, easy, programmed, and planned for these individuals.
The Great Recession was difficult for all generations, but the Millennial generation took it particularly hard. Millennials couldn’t escape the crisis. It filled every news headline and every dinner conversation. They watched the tremendous and personal toll it took on their parents, neighbors, and communities’ financial well-being.
Whereas previous generations had witnessed, lived through, and largely recovered from market ups and downs, for the Millennials, it was a first. They had very little context or ability to keep it in perspective. It was a shock for a generation who for most of its existence was largely protected, carefully looked after, and told they could do no wrong. This generation was regularly told that they were special, prized, and that things would always go well for them. They were taught to not settle, to hold out for the best—and they did. They had no reason to think otherwise until the bubble broke in such a profound way.
Don’t Let Them Downsize Their Dreams
Beginning their careers at a time of record unemployment was the first financial setback of many for this generation. Although unemployment has fallen to 5.4 percent,8 Millennials have yet to benefit or materially experience it, in terms of plentiful opportunity or meaningful wages. Forty-four percent of college graduates in their 20s feel stuck in “low-wage, dead-end jobs.”9 The number of Millennials who make less than $25,000 is at its highest level since the 1990s,10 with almost a third of Millennials making less than $10,000 a year from their jobs.11 Those Millennials who have found work cannot make ends meet alone, with 40 percent12 of this generation stitching together a living combining their meager salaries with support from their families. Wealth inequality is already a hot topic in our country and its impact is significantly felt by the Millennial generation. We can see this clearly when we juxtapose the 28 million Millennials making less than $10,000 each year to the 720,000 of their peers in their generation’s 1 percent making $106,500.13
While these statistics are sobering, we can’t afford to let the Millennial generation wallow in bad news or downsize their dreams.
This generation is forming its spending and savings habits now, and one of the best tools we have to help shape them into responsible investors and great clients is education.
One way to connect with the Millennials through education is to expand the ways we think about education. Here are some suggested topics and ways to get started:
- We have an obligation to help this Recession Generation understand that we have all experienced the best and worst of financial markets and how critical it is to see these as moments, not the final outcome. Help the Millennial generation see that time is on their side and the historical stock market trends show great returns over time. Share your wisdom to help reshape their perceptions, give them perspective, and build their financial literacy muscle.
- Many Millennial investors or children of your Boomer clients feel they have too little savings, or to be more frank: no money to invest. Where there is high unemployment, there is usually low savings and investing. Still, there will be a day when these potential clients’ situation dramatically changes or they experience an inheritance windfall. Spend the time now teaching them how to build and manage a budget. Planning a drip e-mail campaign or, even better, a study group for the children of your Boomer clients to learn about these topics is a powerful engagement strategy. Help them build good habits. Some topics you can potentially explore include:
- Building an emergency savings plan.
- Debt management and reduction strategies.
- Maximizing their contributions in 401(k) and IRA accounts, starting a 529, and the benefits of automating contributions.
- Understanding their attitudes about money, impulse buying, and discretionary spending patterns.
- Don’t let them continue to feel uneasy about stocks. If it makes sense for their goals and objectives, help them ease into this asset class by researching and exploring socially responsible companies.
Communicate with Integrity and Clearly to Build Trust
For the advisors we work with, one of the most difficult consequences of the financial crisis is the bad press that surrounds them. Headlines swarm about the lack of investors’ trust and if it will ever recover. Having the actions of a few bad apples tarnish the efforts of so many trustworthy professionals is one of the most personal and difficult consequences of the crisis to accept. That said, things are what they are and acknowledging Millennials’ distrust of the financial markets, their perception of high fees, and lack of transparency are just a few of the concerns we need to address if we want to sincerely engage these clients.
Some of the ways we’ve learned from both Cam Marston and our own client experiences that can help rebuild trust with this generation include:
- Avoid jargon. For all generations, avoiding jargon and speaking in a straightforward way is a good idea. For Millennials, who are astute at sniffing out authenticity, it’s critical.
- Be authentic and transparent. There’s no need to be anything you’re not with this cohort of clients. Trying to act young and hip will only diminish your credibility. Be yourself and direct, while keeping in mind their unmet needs and unanswered questions. This generation is comfortable being friends with their parents and parents’ friends. The relationship you form with them will feel familiar and will be welcome if you relate to them in the ways that matter to them (rather than leaning on the attributes and successes that may drive your esteem and self-value).
- Recognize the power of their peers. Previous generations trusted institutions and people based on their hierarchy. This generation trusts people. The trusted people in their lives are much more likely to be their peer groups and networks than any expert. Millennials are more comfortable with, and tend to rely much more on, the experience of their peers than any expert—however deep their qualifications. Google yourself and your firm regularly, check out the reviews and strategically develop your online presence as well as other channels where your next-generation clients may look to learn more about you. Welcome reviews and create opportunities for your Millennials to connect with one another. Let these clients know that personally interacting with them and their feedback is important to you.
- Communicate consistently. One of the simplest and often most neglected ways to build trust is to simply be consistent. This is important in our behavior and interactions and also in our ability to regularly add value. One way to do this with Millennials is through your communication strategy. Think beyond traditional touch points. For example, if you send monthly statements to all of your clients, how can you sweeten this for your Millennial investors? Can you provide positive affirmations and reward them for reaching their goals? Create mile markers that show their progress against goals like paying off debt or achieving home ownership. These can be delivered through phone calls or electronic methods. Today’s advisory firms are integrating these value-added touch points into their client experience with the help of technology, for example, sending daily texts with feedback, breaking down the financial plan into simple to-do lists, making themselves available for video consultations and collaboration, and even the gamification of investing to help their clients learn more about investing strategies and build their comfort levels in low-risk environments.
Embrace the Paradox
Think tanks, media, and industry pundits all make big generalizations about the Millennial generation. There is a tendency to take a fact, like the tech-savvy nature of this generation, and extrapolate it too broadly. Here are some contradictions of the Millennial generation that we need to consider if we want to connect and relate to this client. Keep these points in mind:
- Digital Natives with Social Media Skepticism. While Millennials may prefer digital channels like SnapChat, texting, instant messaging platforms, or e-mail for the majority of their communications, our research found a paradox. BNY Mellon’s paper “The Generation Game: Savings for the New Millennial”14 found that while Millennials are generally comfortable interacting with consumer brands over social media, they are turned off when financial services companies use these channels to connect with them. The highest-ranked channels for interacting with a financial services firm, according to the study, are:
- Website/e-mail (40 percent)
- Face to face (23 percent)
- Telephone (18 percent)
Demand for social media interaction was almost nonexistent. The study indicates that Millennials prefer to reserve social media as a space to interact with peers and friends. Some had harsh words (like silly and creepy) for firms that attempt to connect with them in their social space. Before making a blanket assumption that all Millennial clients will want to engage with you or your brand in their social channels, be sure to take the extra step to check in, not only for permission but for guidelines on the type of content they would like to receive.
- Digital Natives Who Like a Personal Touch. While it’s easy to bucket all Millennials as wanting a digital advice delivery experience, we found another paradox here. While it’s true that Millennials who are cost-sensitive or have less to invest may prefer a purely digital channel or robo experience, there does come a time when they value human interaction. Millennials are validators by nature and they regularly check in with parents and peers for guidance. The same is true for their financial advisor. In our experience, the desire for face-to-face validation generally happens when Millennial clients reach an asset level of ~$150,000, or find themselves responsible for outcomes beyond themselves (for example, they’ve been entrusted to care for their parents’ financial or other well-being).
- Their Parents Are Their Most Trusted Advisor. Millennials were cared for and groomed by their parents. The parents of Millennial children sought balanced lives, investing as much in their children as in their careers. The hours they put into work they extended to their children. This created some loss of the usual parent-child hierarchy, and a friendship tended to develop between the two generations. As a result, their parents are their confidants and trusted advisors. The BNY Mellon study “The Generation Game: Savings for the New Millennial” found Millennials overwhelmingly identified their parents as their primary source of advice on financial planning matters.
- 52 percent said they would turn to their parents first for financial advice
- 24 percent a bank
- 16 percent a financial advisor
- 10 percent friends
- 2 percent insurance agent