When I introduce myself as a financial planner, most people think I am a stock broker or only work with rich people. I ask them if they work with one, and the response is usually “no, I don’t have any money”. This tells me they don’t know what a financial planner is, and that the industry has programmed them to think I am there to sell them products of some kind. While I do certainly manage investments as a service, my primary focus as a planner is to get people to make the right choices now that will improve their lives later. There is nothing worse than getting a new retirement-age client and having to un-f*ck 40 years of poor financial decisions. By starting with people when they are young, I can make sure they are never in that situation.
With that out of the way, let’s jump in to the most pressing concern in most Millennial’s minds: student loans. Many of us (myself included) jumped into college feet-first from the financial deep end, and no one told us what the implications really were for us after college. Luckily, I got out with moderate debt, even after finishing my Masters, but I work with a lot of people that are indebted well into six-figure territory. It is a deep hole to climb out of, but it can be done with the proper guidance. I will be writing an article solely on student loans soon, but know that the refinancing options are different for federal vs private loans, the year they were issued, and your income/tax filing status.
The second biggest concern for Millennials is career planning and life changes. Baby Boomers were content to keep the same job and employer for decades, but our generation usually has several jobs before we reach 30. A lot of people like to say that is because we are disloyal and require instant gratification, but the truth is that the job landscape is constantly changing and many entry-level jobs have little opportunity for advancement. Furthermore, Millennials place greater value on fulfillment over a paycheck more so than any other generation before us.
This constant shift in employment comes with consequences that we may not realize or understand intuitively. Different jobs mean different benefits packages, from health insurance to retirement plans. It may also mean changes in lifestyle and residence, all of which have financial consequences. Having a financial planner to guide you through these changes can make all the difference.
Another issue common among Millennials (and near and dear to my heart) is entrepreneurship. Many of us get so fed up with the rat race that we want to take our destiny into our own hands and start our own company. I can say from experience that it always sounds easier than it really is, and that I spent a lot of time researching and getting guidance before I made the leap. After going through this myself, I am incredibly passionate about entrepreneurship and guiding people through the journey.
The final piece of value that financial planning can provide to Millennials is accountability and its effect on our behavior. A lot of people use PFM solutions like Mint to track their finances, only to uninstall it once they see how much of their money actually goes to food and booze. I use similar, more robust tools with all of my clients, and we have those conversations at every meeting. We talk about the effects their financial behaviors have on their future, and try to bring those behaviors in line with their vision. If you don’t have a vision, then that is step one of the process. That vision will shift over time, but it is hard to work towards a goal if you don’t set one in the first place.
PS- I have to be honest about something (I am a terrible liar). I really hate the connotations that go along with the label “Millennial” and would have much preferred to use “Gen Y” or “Young People”, but then no one would read this and my efforts would be wasted. I used the term purely for SEO purposes. I’m not proud of it, but that’s just how the internet works.
Kyle Thompson, MBA is the Founder of Leetown Advisors, a fee-only RIA firm located in the Greater Des Moines area. For more information, please visit his website, subscribe to his blog, or email him at firstname.lastname@example.org.