munKNEE.com Your Key to Making Money
for approx. 75% of the adult work force in the next 10 years. The stakes are high for both sides. Here’s why.
The following article is presented courtesy of Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.
Many Millennials are at risk of falling behind on their financial goals because they haven’t even started investing yet. For example, 50% of Americans between the ages of 18 and 29 [see chart below] have zero retirement savings, according to a Federal Reserve survey. Millennials, also known as Generation Y, are generally defined as those in their 20s or early 30s, and they are justifiably wary of the financial industry and the market.
- They are extremely conservative as investors: Millennials are the most fiscally conservative generation since the Great Depression, according to a UBS survey.
- They’ve seen their parents get hit with two major bear markets the past 15 years.
- They tend to avoid the stock market and hold a higher percentage of cash than older investors.
- They’ve also witnessed the effects of the housing boom and bust.
- They are very skeptical: The financial crisis has also made them understandably suspicious of Wall Street and potential conflicts of interest.
- Millennials require a high level of trust before they give their money to a bank or financial adviser.
- They verify using information on the Internet, social media and from personal connections.
- They defy stereotypes: They may be seen as coddled and spoiled, but it turns out they care a lot about their financial futures and don’t want to repeat their parents’ mistakes.
- They’re tech savvy and highly educated as a group.
- They want to have control over their finances, so they’re more likely to be self-directed investors.
- They want to be comfortable, but they don’t want their lives to be dominated by money, which is often secondary to pursuits such as traveling, family, staying healthy, friends and volunteer work.
- They have financial challenges: In many ways, it’s not easy to be a Millennial.
- College tuitions have skyrocketed in recent years, and many graduates are saddled with high levels of student debt. The Class of 2014 is the most indebted ever.
- Rents and home prices are creeping higher while wages have mostly stagnated.
- More Baby Boomers are staying in the workforce and delaying retirement after the financial crisis, making it harder for younger investors to find jobs.
- The above are all reasons why Millennials are hitting major milestones later in life such as getting married, buying a house and having children.
- They tune out marketing and advertising: Perhaps more than any other generation, Millennials understand how marketing and advertising work, and they’re adept at ignoring it or even finding ways to turn it off completely. They don’t click on banner ads or open mass emails.
- What works with Baby Boomers doesn’t work with Millennials: You can’t market to Millennials in the same way as retirees, but this goes beyond just the message and investments.
- With social media, the financial-services industry is still doing what it always has — just faster and louder.
- Millennials are keenly aware of when they’re being advertised or marketed to, and they resent it. Wall Street can’t talk down to Millennials.
- Wall Street has to turn its traditional marketing strategy on its head to reach Millennials.
- Social media engagement: Social media is where Millennials get a lot of their information and learn about brands. According to recent study, 77% of Millennials own a smartphone and they spend nearly 15 hours a week texting, talking and on social media.
- Companies need to engage followers on social media, not just talk AT them with links to their own blog posts and products. It needs to be a two-way street, with shares to other Facebook accounts and retweets to other Twitter handles.
- It’s important to educate followers, and be a part of the daily discussion with analysis of relevant, timely topics…and it helps to focus on a specific theme or niche, rather than trying to be all things to everyone…
- Wall Street’s approach to social media is probably backfiring for a lot of financial-services firms. Millennials just see these companies the same way they see Grandpa trying to “do Facebook.”
- Personalize it: Millennials are leading the backlash against conglomerates — the huge companies with big marketing budgets and aggressive sales tactics.
- Many Millennials are gravitating to companies that take more of a personalized, Mom-and-Pop approach. Many are willing to pay a little extra to “feel good” about the companies they buy from and deal with.
- Beyond marketing: Millennials as a group do more research than anyone else, BEFORE they even begin the decision process of buying a product or service. They’re very good at using the Internet and social media to find what they want. If a company has a bad product, customer experience or corporate culture — Millennials will see right through it – and then they’ll tell all their friends on social media. No amount of slick marketing can fix a broken corporate culture…
- Barry Ritholtz entitled Time, Not Timing, Is Key to Investment Success** and
- Ben Carlson entitled Millennials & The New Death of Equities***
that every financial advisor should incorporate into his/her marketing approach to Millennials:
Thinking long-term increases your probability for success in the stock market while the day-to-day noise gets drowned out by discipline and compound interest.”
2. “The biggest assets you have as a young person are your human capital for future savings and the ability to allow those savings to compound over many years.
I’m not sure what it’s going to take to get my fellow Millennials to understand that their aversion to stocks will only make it harder to achieve their financial goals in life.
The unfortunate reality is that it takes investors time and experience to learn about how the markets work.
The stock market doesn’t care if young people invest or not. It’s not going to wait around until you get more comfortable with taking risk.
Those that invest increase the probability of reaching their goals while those that don’t risk falling behind.
The fact is that the best way to build wealth for the majority of people is to slowly invest over the long-term and let compounding do most of the work for you.”
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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