Millennials know that they should save for retirement, but a new study from Principal shows that many young workers are finding that to be easier said than done, creating a major opening for advisors.
Financial security rates as Millennials’ top life goal, with 70% of respondents saying it was a primary objective of theirs, ahead of choices such as “healthy living,” “having fun,” and “exercise.” A full 61% listed it as a passion of theirs, behind only starting a family (62%) and raising a family (79%). But with 68% of respondents having taken out student loans, more and more Millennials are waiting longer to accomplish these goals, or shelving them entirely.
While Millennials struggle to find lower housing costs, access to adequate retirement plans and consistent financial guidance, it’s not like they aren’t trying. Principal reports that 66% of Millennials have a monthly budget they try to follow, while 57% say they have an emergency savings fund, though a third of those respondents said their fund would only cover basic expenses for three months or less.
There was also good news for financial advisors; there’s still a market for their services among young people, but their advice isn’t viewed as sacrosanct. While 25% of Millennials say they already work with a financial professional, 78% of those say they follow up on their advisor’s recommendations by conducting independent research of their own.
The survey also reinforced the importance of earning a client’s trust; of those who have an advisor, 67% of Millennials said they found that financial professional from a friend or family member’s recommendation. Just 9% said they found their advisor by searching online, the same percentage as those who said they found theirs through their employer.
The relative popularity of financial advisors, and financial literacy in general, among younger Americans could be traced to the fact that Millennials overwhelmingly feel responsible for their financial security. When asked at what age an adult should be financially independent, 84% said age 25 or earlier, including nearly one-third of respondents who said age 21 or younger. In addition, 90% said they and their spouse bore responsibility for funding their own financial future.
And while over 80% of Millennials who have used a financial professional feel more confident in their finances, there is still the 75% of young workers who do not have an advisor. Over two-in-five (41%) of those without an advisor say they don’t have enough money to warrant meeting with one, while 36% said they don’t want to pay a fee for advice.
However, just 11% of those without an advisor said they wouldn’t be interested in meeting with one, irrespective of income level.
The study was conducted online in the fall of 2014, and the respondents were U.S. residents aged 23-35, who are in the workforce at least part-time.
