“They don’t have jobs — or security if they have a job. Real estate prices are rising more rapidly than their income,” said Jung, a seven-year MDRT member. “There is no future in their planning. Instead, they work hard for a year and then use the money to go on holiday in the U.S. or the U.K.”
— Sungan Jung
“Instead of targeting high-net-worth individuals, who take ages to make decisions, I can earn more by targeting a larger number of millennials,” he said.
“It’s not that they don’t actually have dreams; they just forget about it for a while,” he said. “We start with short-term and mid-term asset management for now, and I bring up their dreams and hopes for the future for long-term planning.”
Because she knows this generation isn’t interested in retirement planning and is looking for tangible results, Benitez repositions her products.
“We talk about something they’re passionate about, not retirement,” she said. “I ask, ‘Do you plan to stay in the same job forever? Let’s build a resignation fund or a freedom fund that gives you a ticket out.’”
Opportunities and challenges
“Millennials are going to continue to dominate the workplace,” said Aaron L. Hammer, LUTCF, a 10-year MDRT member from St. Cloud, Minnesota, during a presentation at the 2016 Annual Meeting. “As they enter their peak earning years, it’s important that we’re able to communicate with them and work with them.”
Hammer sees both challenges and opportunities for this generation. Many have unmanageable student debt, which makes it difficult for them to handle day-to-day expenses such as rent, health insurance and their cell phone bills. Some are forced to live with or receive support from their parents.
But there are also opportunities:
- They’re very eager for information. “They want financial and life insurance advice. Even before they have serious financial assets, you need to start building a strong financial foundation with them,” Hammer said. “It might not be prosperous to work with them now, but in the future it might be.”
- They stand to inherit trillions from their boomer parents.
- Right now, they control more in annual spending than any other generation.
“That’s where they’re looking: blogs, videos, talking to friends,” Hammer said. “You need to have an interactive website with blogs and videos and a way to communicate back and forth. It might be text, it might be Snapchat, it might be email — although email is going out of favor with millennials. You need to figure out how they want to be contacted and then deliver that, because once you get in with one, you’re probably going to be able to penetrate their friend group.”
When meeting with a millennial, start with the basics, Hammer said. Begin with something as easy as a budget. At the end of the month, they might have some extra money in their accounts.
“Show them the way some of that money can be used for retirement or an experience. They’re all about experiences. Talk about what kind of experience they can have if you can help them save $20 or $40 per month to get to their goal.”
Laura Cervantes, a three-year MDRT member from Chiluca, Mexico, spent time working with a branding firm to better understand the millennial generation and adapt her processes.
“All my efforts are focused on making smart strategies for this generation based on everything we know about their lifestyles,” she said. “In the case of millennials, we find dreamers, willing to do anything to fulfill their dreams, who believe pampering is the next luxury. They like to be inspired and enjoy life and, above all, they love themselves.
“For me, a savings instrument is the best way to love yourself. Tributing yourself with a percentage of what you generate gives you a life full of possibilities. That’s how I approach my clients,” Cervantes said.
When millennial clients enter the workforce, Cervantes creates flexible plans that help make saving money a habit. “As their income increases, so will their contributions and dreams,” she said. “An important issue for them is that they perfectly understand how their investments work, so I support their purchasing decisions through social media by publishing infographics, images and tips that explain the wonders of financial freedom.”
For example, Cervantes began working with a 28-year-old client two years ago. The client was working at a consulting firm and started with the minimum contribution. Recently, he started his own business. “The savings in his plan haven’t been used, and he has additional contributions that are increasing month by month, so next year he plans to get a second plan to reinforce the capitalization of his business.
“Knowing the millennials’ market favors my approach; it also helps me increase the number of clients,” she said. And it pays off in the long run. “They are the millionaires of tomorrow.”
1. They understand saving money. If you can help them, they’ll work with you.
2. If you have experience, you will be more credible to them.
3. They want a whole picture plan, so if you specialize in something, find a team to tie the whole plan together. Life insurance, auto insurance, investing — they want it all in one place.
4. Very few of their friends and colleagues are advisors, so they’re not turning to them. Also, they don’t want to tell their friends what they do or don’t have.
5. You can help them with cash flow: Once you find it, where is it going?
6. You can help them pay off their debt, and that’s very important to them. Keep paying off the debt, and then still working toward retirement.
7. They don’t know how to handle credit. A lot of kids went to school, took out student loans, got an application for a credit card and now have credit card bills. Most of them have long-term financial debt, so how do we structure that? Step one is to help them immediately. You can’t help them long-term until they know where they are right now.
8. Most of the millennials are going to leave their parents’ advisors. How can we tap into our current clients to get in front of their children right now? We tap into our current clients to find out who their beneficiaries are. Most of them list their kids as a contingent beneficiary. Most of them will give you their children’s names and phone numbers. Then it’s on us to be proactive and go out and get in front of them, to get them as clients so we can help them like we’ve helped their parents.
9. We can be where they are: Facebook, Twitter, Snapchat. If you can communicate business ideas on there, that’s great. If you can’t, be on there to develop a personal relationship with them and then build a professional relationship.
10. You have some millennials as clients. Start with them and host an event for millennials. Teach something basic, and don’t let their parents come. Tell them to bring their friends, because their friends are the ones they’re talking to. They will like, respect and trust you after they get some more information.