The Millennial Generation is about to hit the financial services industry with the destructive force of a tidal wave. After the water drains away, aging financial advisers will be left wandering in a daze amidst the wreckage of Bloomberg terminals, stacks of waterlogged Wall Street Journals, and a jungle of wires ripped from landline telephones.
Could anything add to this trauma? Yes, FAs will soon lose all of their accounts to robo-advisers.
This seems the immediate future of our business from industry websites, articles in the financial press and hype from robo-advisor startups. Feeding this dystopian view of the future are alarming news reports such as this one of April 25th 2016 from the respected Pew Research Center: “Millennials Overtake Baby Boomers as America’s Largest Generation!” Face it, you’re a dinosaur.*
What should you do?
- Go immediately to the nearest retirement home and check-in?
- File a lawsuit against someone?
- Sell everything you own and move to place where the cost of living is lower such as Peru or North Korea?
“None of the above,” says Cannon Executive Vice President and Director of Instruction, Linda Eaton. “FAs should not fear their practices are going to be destroyed by changing demographics.” Linda, who began her career in the financial services industry as a Financial Adviser with Merrill Lynch, speaks to audiences of FAs around the country and has her thumb on the pulse of our business.
The Pew Research Center defines the Millennial generation as comprising people in the US ages 18 to 34 (as of 2015) and the Baby Boom generation as comprising people in the US ages 51 to 69. ** Linda makes the obvious— yet rarely made point— that as of now, Millennials don’t have a lot of money. So who does?
“Everyone in our industry spends lots of time looking at numbers,” Linda says, “so just a brief glance at the numbers on household wealth from the US Census Bureau will tell you as an FA where the money is.”
Median household wealth by age in the United States as of 2011 according to the US Census Bureau. ***
Age range Median household net worth
Under age 35 $6,676
35 to 44 $35,000
44 to 54 $84,542
55 to 64 $143,964
64 to 69 $194,220
“The Millennial generation is just beginning the asset accumulation phase of their lives,” Linda says, “while most Baby Boomers have already accumulated a lot of wealth. You don’t need to fear for your practice. Besides, I know a lot of Millennials. Most of them are very nice and truth be told, they aren’t much different from the rest of us.”
Finally, there is a curious fact about Millennials contained in the aforementioned study from the Pew Research Center: they don’t like being called Millennials.
“Despite the size and influence of the Millennial generation… most of those in this age cohort do not identify with the term ‘Millennial.’ Just 40% of adults ages 18 to 34 consider themselves part of the “Millennial generation,” while another 33% – mostly older Millennials – consider themselves part of the next older cohort, Generation X.”
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Cannon Financial Institute is the “gold standard” for wealth management training, development and consulting. I worked at the firm for many years and my colleagues were the most talented people I have ever worked with. Last year the firm sought me out to write articles for them which I started doing in January of 2016. After a hiatus of nine years, I am pleased to report that my colleagues continue to be the most talented people I have ever worked with and it is a pleasure to be working with them again. I will posting the articles I write for them on my blog after they appear on Cannon’s website. https://www.cannonfinancial.com