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Millennials Value Personal Relationships: What it Means for Independent Financial Advisors

Millennials Value Personal Relationships: What it Means for Independent Financial Advisors

July 12, 2022

There is no getting around it. Mobile devices are a dominant force in society. The vast majority of Americans, 97% according to Pew Research Center, own a cell phone of some kind.  And when it comes to smartphones between 95% and 96% of millennials, people born between 1982 and 2000, have one. But if one concluded those figures imply millennials prefer technology over all else, especially when it comes to their financial matters, financial advisors would do well to develop personal connections with the age group.

Millennials Embrace Trading Apps AND Financial Advisor Relationships

A survey reported in Think Advisor illustrates potential opportunity. On one hand, a large percentage of millennial investors (58%) polled by Welthramp say digital trading apps offer the freedom and flexibility to invest the way they want. However, the survey also found millennial investors hire financial advisors to manage their investments at a higher rate than Generation Xers and baby boomers. More than 80% of younger investors see coordination between digital tools and their financial advisors as most important. Another critical consideration for hiring an advisor was found to be the advisor's level of expertise and overall approach to the advisor-client relationship.

We’ve already seen from AN EARLIER ARTICLE that while millennials expect a lot from technology, they do not consider it a substitute for human interaction. That is important for independent financial advisors looking to serve what is now the largest group of the U.S. population.

While connections often are made through a device, millennials value meaningful interpersonal relationships. This piece from MILLENNIAL MONEY suggests that when millennials seek financial advice, they value someone who actually listens and can respond to their own goals. This involves building a trusted relationship with clients, which is something that any potential client is really seeking.

The article quotes financial advisor Sophia Bera, the founder of Generation Y Planning and regarded as one of the top financial planners for millennials in the United States. Bera advocates a “fee only” approach where advisors provide not only sound financial advice, but also can be a life coach for their clients.

“Eighty percent of what I do has nothing to do with investing,” Bera noted. “I use myself as a model for my clients because most of them want to have flexibility in their own lives.”

More Frequent and Less Formal

Flexibility can mean being willing to deal with the busy schedules and long hours of millennial clients. Technology can offer legitimate alternatives to occasional formal meetings, as we learned during the pandemic when working remotely became standard practice for many. U.S. News finds that while remote works has declined from its levels of the pandemic but is still – depending on how broadly one measures it – three to four times as prevalent as it was in 2019, the percentage of workers who still say they want the option of working from home to some degree is close to half.   Millennials have grown accustomed to less formal but more frequent touch points in all facets of their lives.

A STUDY ON WORK PLACE INTERACTION reported by CIO Insight found that in this age of instant communication millennials would rather chat for 15 minutes with their boss each week, compared to waiting for a formal quarterly performance review. “In addition to consistency in communication, millennials value meaningful interpersonal relationships, according to the survey, and more frequent informal check-ins are a great way to satisfy both those desires.”

The notion that meaningful interpersonal relationships matter to millennials probably should not be a surprise. It is really a product of human nature, validated to some extent by ongoing research going back to 1938. INC. SUMMARIZED what Harvard researchers concluded while tracking the “lives of 724 men for 79 years. The men were divided into two classes. The first group were sophomores at Harvard College while the second was a group of boys from Boston’s poorest neighborhoods. It turns out that flourishing in life is a function of close ties with family, friends, and community. It had nothing to do with fame, wealth, social class, IQ, genes, etc.”

Technology can perhaps be called one of the modern ‘facts of life’; it’s not going anywhere. But technology will not replace meaningful personal interactions that create trusted relationships. Those have always been essential to a financial advisor’s practice.  It appears that it is even more important to the millennial generation.

So, it would also seem likely they would value a similar communication pattern from their financial advisor.