Yesterday, my colleague Bruce Sellery (@brucesellery) and I presented our new program Money & Millennials to several hundred financial advisors. The discussions we had before, during and after the session highlighted for me the need to have dialogue around this issue, not only from a sales perspective – how do we engage Millennial clients?; but also from a people leadership perspective – how do we support our Millennial employees in gaining greater financial literacy and being able to manage their money to achieve the life they want?. Understanding what Millennials value will help financial institutions and advisors best meet their needs, and it will also help HR leaders create programs internally that support this generation in getting a handle on their money to achieve what is important to them.
Here is a clip of Bruce Sellery talking about Millennials and Money on CityLine:
Why Care About Financial Wellness?
Recently I presented at a conference on Financial Wellness and Retirement Readiness. I spoke about financial concerns from the perspective of each generation. Other experts shared insights about the economy, consumer debt levels, the real estate market, and the overall lack of financial literacy in Canada. What I was surprised to learn was that if employees don’t manage their money effectively, often due to a lack of financial knowledge or guidance, this is a major cause of anxiety and stress, resulting in mental health issues. These issues in turn, impact workplace productivity and performance due to increased employee absenteeism, short-term disability claims and an overall increase stress. This is true of all employees, with financial stress being rated as the number one stressor among survey respondents (44%) according to the 2012 Sun Life Financial Health Index.
Specifically as it relates to Millennails, a Bank of America report conveys the rising levels of anxiety that this generation is facing when it comes to their financial well-being. The issues they struggle with and stress over range from student debt, which averages at over $26,000 per student in Canada, to the high cost of living, to not having enough money for a wedding or home. Part of this stress stems from a lack of education in terms of financial literacy. Author Andrew Pepler notes that only 17% of Millennials believe they have expertise in personal finance, compared to 34% who admit to having expertise with social media. The lack of knowledge regarding financial literacy serves as a detriment for Millennials, causing disruptions in their life such as stress.
In our session, Brue and I spoke about the paradox that Millennials are experiencing – everything is different for them when it comes to money, yet everything is the same. Some of the issues that Millennails are facing, which impact their concepts of money and investing include:
- Technology – there is an App for everything, including money. 67% prefer online access to their financial services and expect that they can bank, invest and engage with advisors online.
- Pervasive Consumer Culture – there is an abundance of choice for every type of product. This can cause greater indecision. Not only are there more things to buy, but there is easier access to credit to buy them, thus encouraging higher levels of consumer debt.
- Real Estate Boom – Sky high prices in major urban centers means that many Millennials can’t afford to become first time home buyers so they are living longer with parents or roommates, or choosing to opt out of the home ownership “dream” to spend their money on other things they value.
- New Concept of Retirement – this generation has a hybrid version, versus binary concept of retirement. Many people in this generation won’t work for one employer for life and retire with a pension plan and benefits. They expect to work longer, work differently, and come in and out of the workforce as they see fit.
- Student debt – with an increase in debt student, Millennials are entering the workforce already concerned about how they can climb out of the debt burden they face. Many organizations, particularly in financial services, are actively partnering with new hires to help them manage their student loans and offer attractive ways they can help reduce the stress around student debt.
- Changing Job Market – Millennials have embraced the “gig economy” and the “uberization” of work, where they leverage their skills through contract work to complete projects where and when they want. This new economy can be exciting and offer up flexibility, but no pensions or security are provided. In addition, many new graduates are underemployed and struggle to find full time work, thus exasperating their debt levels and delaying when they start investing / saving.
- New Definition of Success – Millennials seek to create a life that has meaning…to them! This means that living a “great life” may look differently than how other generations may have defined that. Millennials want to have a fun, exciting, great life style throughout their lives…not delay gratification and save for retirement only to enjoy their lives with they are in their 60’s or 70’s. Life should be one long, continuous happy event, not something to dredge through until someday in the future all of the things they have dreamed about can come true. This may also mean that this generation doesn’t want to be “rich” in the same way as their parents. They want to have rich experiences, rich friendships and rich connections to social causes. They may also be able to amass great wealth, but it will all be in service to what they want their money to be for – be it adventure, experiences, things, flexibility or contribution.
Despite all of these changes in mindset and approach, everything is still the same when it comes to money. Millennials still need to:
- Live within their means
- Eliminate high interest debt
- Save for retirement, even if it is a hybrid model
- Reduce anxiety and feelings of confused and incompetent due to low financial literacy
These challenges create a great opportunity for financial advisors to partner with Millennial clients to understand what they value, what their money is for (from their point of view), and how to become part of their ‘team’ to support their financial well-being. This also means that organizations can join in and provide Millennials with financial literacy training and insights into how to get a better handle on their money so they can reduce financial stress and minimize the impact on workplace performance.
Overall employee wellness, including financial wellness, is the next step in ensuring your workforce is as engaged and high performing. By reducing anxiety and stress around money, employees can feel more empowered, more focused on achieving their goals and more loyal to an organization and leaders who are invested in their long term success.