It’s been said
that Millennials, whose influence grows daily, generally don’t like the name
their generation has been given. And while much has been written about them,
Millennials do share undeniable characteristics — some of which have important
implications for retirement plan advisors.
Speaking at the
National Tax-Deferred Savings Association’s 30th Anniversary Summit in Tampa,
FL, Jan. 27, Lisa Greenwald of Greenwald Associates offered a look at the
Millennial generation and how best to engage with them and help them work
toward a financially secure retirement.
Why do we talk
about them so much? Because they are a huge demographic group, and by 2025 they
will be the largest generation in the workforce, Greenwald observed.
generation that presents unique challenges and opportunities, according to
Greenwald. And there are myths about them that should be understood — and
dispelled, she suggested. For instance, it’s a myth that Millennials are all
broke and in debt, Greenwald says. It is true, she added, that “they face unprecedented
debt levels.” But at the same time, she observed, some Millennials already are
among the richest Americans. Millennials may be in debt, but they also are
“pretty darn good defined contribution plan savers,” she said.
The Elephant in
But debt still
is a problem for Millennials, Greenwald said, calling it “The elephant in the
room.’ How big an elephant? She noted that in a poll, 9 out of 10 Millennials
told her firm that paying off student loan debt is a major obstacle to saving
for the future. Credit card debt is also an impediment.
But emphasis on
paying off debt comes with a pitfall, Greenwald suggested. She warned of the
“snowball effect,” the results of waiting to start saving for retirement until
debt is paid off. By then, she says, “it will be too late” to save for it.
Going it Alone
Greenwald says, is that Millennials are too young to save for retirement and be
concerned about saving for it. She said that her firm found that 9 out of 10
consider it a top financial priority — second only to building general savings.
“Millennials know they’re not saving enough, but they’re optimistic,” she said.
And not only do
they believe in saving, they also expect to do it themselves. “Millennials are
the product of a DC/DIY world,” Greenwald said. They believe it is no longer an
employer’s responsibility to take care of an employee’s retirement. “It shows
the impact that the DC plan has had on the Millennial world. They’re going it
alone,” she said.
The fact that
Millennials are going it alone and feel alone regarding saving doesn’t mean
that they don’t want help, according to Greenwald. She reported that in her
firm’s research, 81% of Millennials said they want to talk to a professional,
and nearly three-quarters trust an advisor more than an algorithm. “Most would
like to manage their retirement accounts primarily online, with the option for
in-person help,” Greenwald said. They are comfortable with shopping and banking
online, she said, but not with investing online. She added that they found that
67% check their bank balances online, but a mere 2% want to select investments
a role in meeting those sentiments, Greenwald indicated. “Most financial
professionals that Millennials will encounter are likely to be at the
workplace,” she said. In addition, the employer match is important. Her firm
found that when their employer matches their contribution to their retirement
accounts, 50% of Millennials contribute to the level of the match, 14%
contribute below it, and 14% contribute above it.
aren’t kids anymore,” said Greenwald. “They can’t really afford to wait. The
DC/DIY mentality is there, but they really want help.”
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