Millennials are a study in contrasts. They spend, but they save. They want connectedness, but need autonomy. They are sometimes labeled as lazy and entitled, yet these stereotypes are largely based on perceptions from a decade or more ago.
News flash! Millennials have grown up.
Now, Millennials (born 1981–1996) make up the largest living segment of the U.S. population,1 and they may also be the generation hardest hit by recent global and economic events.
Despite being the largest generation, Millennials control only 6.6% of the wealth in the United States — while Baby Boomers and Gen X together control more than 80% of the nation’s total assets.2
But those numbers could shift dramatically in coming years as older generations eventually embark in The Great Wealth Transfer. The intergenerational shift over the next few decades could see a seismic portion of that wealth end up in the hands of their Millennial heirs.
Financial advisors are left to decode this seemingly self-contradictory generation in order to establish, build and maintain trusted relationships with Millennials.
Easier said than done, as the contradictions that partially define them have also generated plenty of misinformation.
We’re debunking three popular myths about Millennials so you can better understand how to reach this generation, help them recognize and address their needs, and grow your business.
The net effect of two once-in-a-generation events — the Great Recession and the COVID-19 pandemic — hit Millennials harder than other age groups in the span of little more than a decade, just as many were launching their careers.
Millennials’ experiences may affect their investing habits, but they don’t have to think of their investment decisions as an all-or-nothing proposition. Have a conversation surrounding how risk control annuities and portfolio diversification may give them a voice in how to manage risk, protect savings and increase growth potential in ways that align with their personal investment comfort and confidence levels.
While the “You Only Live Once (YOLO)” mindset is a common stereotype applied to Millennials, the numbers suggest that they are making efforts to keep expenses in check. Despite generally spending less than older generations, they also may earn less, meaning those expenses take up a bigger percentage of their resources. Lower wages, inflation, market volatility and lingering debt may present obstacles to investing.
Ongoing debt may be keeping Millennials from achieving their personal and financial goals, as many entered the workforce with higher levels of student debt than previous generations.4
44% of Millennials have dipped into their retirement savings, far more than any other generation, with 33% of Gen X being the runner up.4
Why? Millennials were more likely than other generations to cite debt as the top reason they borrowed from their retirement savings, among others:
Paying Off Debt
Financial Emergency
Medical Bills
Home Improvements
Purchase of Vehicle
Purchase of
Primary Residence
Everyday Expenses4
Even though Millennials are pursuing opportunities to improve their financial status, nearly one-third (30%) liquidated assets from their qualified retirement savings plan to cover financial obligations during a financial crisis.3
Help your Millennial clients define and refine what they care about, and introduce them to socially responsible investing (SRI) and social governance standards (ESG) companies they may not be familiar with but warrant investment consideration. With your guidance, Millennials could end up with the best of both worlds— investments with social impact and solid returns.
More than half of Millennials (56%) are confident in their ability to protect their finances in the event of another financial crisis (compared to 43% of Gen X and 33% of Baby Boomers) 3
Nearly all Millennials (98%) say they use the internet,7 and their use of smartphones is ubiquitous. There’s little doubt these digital natives are more comfortable with technology than previous generations.
But virtual interactions aren’t a replacement for the human touch. About two-thirds (68%) of Americans, including Millennials, who could only have digital interactions during the pandemic said that they were useful but weren’t a replacement for in-person contact.8
While they acknowledge the convenience and ease of digital apps for managing their money and investments, Millennials also recognize that as life’s complexities expand beyond the limits of a robo-advisor, the need for an experienced, trusted advisor increases.
24% of Millennials reported that they didn’t work with a financial advisor prior to the pandemic but do now.6 Perhaps it’s because 80% of people who had professional help said they were able to build their savings during the pandemic compared to only half (49%) who didn’t work with an advisor.6
Millennials’ unique income, debt and inheritance circumstances, together with their openness to new ideas and willingness to engage with innovative options like automation and fintech, make them well suited to a holistic, individual and educational approach to financial planning.
More than four in 10 financial professionals (41%) say that Millennials are a primary target for new clients.3 Understanding the realities of this group’s needs, expectations and challenges, and helping them embrace their financial power, is a growing necessity for them, and for your business.
To learn more about harnessing the power of risk control for your clients, visit smartriskcontrol.com, contact your Regional Sales Director or call the CUNA Mutual Annuity Solutions Desk at 877.345.GROW (4769), option 1.
STATISTICAL SOURCES:
1 Census.gov, National Population by Characteristics: 2020-2021, June 30, 2022.
2 Federal Reserve, Distribution of Household Wealth in the U.S. since 1989, Aug. 5, 2022.
3 Nationwide Retirement Institute, Busting Stereotypes: Millennials Take Control of their Finances, May 10, 2022.
4 Nonprofit Transamerica Center for Retirement Studies®, Living in the COVID-19 Pandemic: The Health, Finances, and Retirement Prospects of Four Generations, Aug. 2021.
5 U.S. Bureau of Labor Statistics, Table 2602, Consumer Expenditure Surveys, 2020, Sept. 2021.
6 Northwestern Mutual, Planning and Progress Study 2022, 2022.
7 Pew Research Center, Internet/Broadband Fact Sheet, April 7, 2021.
8 Pew Research Center, The Internet and the Pandemic, Sept. 1, 2021.
IMPORTANT DISCLOSURES
This material is informational only and is not investment advice. If you need advice regarding your financial goals and investment needs, contact a financial advisor.
Annuities are long-term insurance products designed for retirement purposes. Many registered annuities offer four main features: (1) a selection of investment options, (2) tax-deferred earnings accumulation, (3) guaranteed lifetime payout options, and (4) death benefit options. Before investing, you should consider the annuity’s investment objectives, risks, charges and expenses. The prospectus contains this and other information. Please read it carefully. To obtain a prospectus, contact your advisor, log onto membersproducts.com, or call 888.888.3940.
All guarantees are backed by the claims-paying ability of the issuer and do not extend to the performance of the underlying accounts which can fluctuate with changes in market conditions.
Annuity contract values, death benefits and other values fluctuate based on the performance of the investment options and may be worth more or less than your total purchase payment when surrendered. Withdrawals may be subject to surrender charges and may also be subject to a market value adjustment (MVA). Withdrawals of taxable amounts are subject to ordinary income tax, and if taken before age 59½ may be subject to a 10% federal tax penalty. If you are considering purchasing an annuity as an IRA or other tax-qualified plan, you should consider benefits other than tax deferral since those plans already provide tax-deferred status. The company does not provide tax or legal advice. Contact a licensed professional.
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Annuities are issued by CMFG Life Insurance Company (CMFG Life) and MEMBERS Life Insurance Company (MEMBERS Life) and distributed by their affiliate, CUNA Brokerage Services, Inc., member FINRA/SIPC, a registered broker/dealer, 2000 Heritage Way, Waverly, IA, 50677. CMFG Life and MEMBERS Life are stock insurance companies. MEMBERS® is a registered trademark of CMFG Life. Investment and insurance products are not federally insured, may involve investment risk, may lose value and are not obligations of or guaranteed by any depository or lending institution. All contracts and forms may vary by state, and may not be available in all states or through all broker/dealers.
CMGA-2169391.3-0922-1024