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Millennials face the most challenging economic climate of perhaps any generation in America since the Great Depression. This age group of people born from 1981 to 1996 (a debatable timeframe), is experiencing its second recession in only a decade. On top of that, these recessions affected millennials during the beginning of adulthood. This is a crucial period career-wise and to start building financial stability. Due to that, many millennials were left with specific debt and affordability concerns. Those that managed to build wealth, lost trust in the traditional financial market. Thus, when millennials look for financial advice, they might have similar goals to previous generations, but they often demand a different approach to achieve them.
If you are a millennial looking for help with financial planning in this article might help you. For starters, it will give you some tips on what to take into consideration when choosing a financial advisor. Then, the article will show you great financial advisor firms in focused on the millennial market.
If you disregard the current pandemic, the US job market has been improving in the last few years. However, millennials are suffering from a face wage stagnation partially due to the 20-year pattern of declining labor mobility. The labor market mobility began to stagnate in the year 2000, which is when the oldest millennials were joining the job market. Employers started to have more leverage to negotiate salaries when workers began to move around less - both from job to job and from region to region. This created a phenomenon called monopsony, which results in employees being paid less.
Entering the job market amid this phenomenon made it difficult for millennials to make up for the lost earnings of a slow career start. Initial low salaries are compounded when the following raises are also lower, becoming harder to save and invest. In addition, the US reached a record amount of debt (mainly from student loans and on millennial's backs). All that resulted in a very challenging financial situation for this generation.
Of course, many millennials managed to build wealth. But even those differentiate from previous generations. They tend to believe less in the traditional financial market, such as stocks and traditional banking. This is in part because they lived through the US stock market crumble and the bankruptcy of some of the largest banks in the country during the 2008 financial crisis. Because millennials mistrusted conventional financial institutions, alternative financial solutions have emerged. Some examples are online banks and alternative investment tools.
All these factors resulted in an economic scenario very different from the ones lived by previous generations. Thus, using the same strategies to create a healthy financial future won't work as well for millennials.
Financial advisors are professionals who assist you with your overall financial planning, such as creating strategies for reducing financial risk and building wealth long term. They can give you a game plan that sets you on the path to achieve your financial goals. Financial advisors can come in many names, such as wealth managers, investment managers, financial coaches, and so on.
It became clear that millennials need new approaches when it comes to their financial planning. So, it is no surprise that many financial advisors in started to adjust their services to this generation. The industry of financial advisors is traditionally catered to older and wealthier clients. But with the increasing demand, many financial advisors began to make financial planning and literacy more accessible to millennials. Some of these professionals are specialized in the millennial market. Others included the needs and demands of this generation in their services. Finally, some are millennials themselves, thus they know what this generation is looking for first hand.
If you are a millennial considering organizing your financial life and future with an expert, there are some tips to take into consideration when choosing the ideal financial advisor for you in .
Define the Type of Assistance You Need. Identifying what you want from the financial advisors is a great first step towards finding the best match. For example, if you need assistance with taxes, search for an advisor specialized in tax work in , including the appropriate qualifications. Or, if you are only looking for investment management, perhaps the best fit will be a low-cost service such as a Robo-advisor.
Search for a Financial Advisor Who Is Close to Your Age. This may sound silly, but it can be a vital factor. It is hard to make a financial advisor from a completely different generation understand the needs and struggles you are going through as a millennial. There are exceptions for this, but working with a financial advisor with a top 10-year age gap from you will probably be a better fit. They will know what you are going through not only on a professional but also on a personal level because they might have gone through similar circumstances.
A Good Personality Fit Is Important. You don’t need to be friends with your financial advisor, but you do need to trust them at least a bit for it to work. If you are accepting financial guidance from this professional, it is important to have some personality fit. This will not only improve your trust in your financial advisor but make the whole process more pleasant.
Look for a Fee-Only Advisor. Some financial advisors owe their clients a fiduciary obligation, which means they must serve their client's best interests rather than their own. The most recommended is to work with a licensed, registered fiduciary. In addition, it is ideal that the advisor works on a fee-only basis. This means the professional will only be paid directly by you rather than by commissions for selling specific investments or insurance policies, resulting in more unbiased advice.
Search for Someone that Will Work with Your Busy Schedule. Everyone is busy nowadays, especially millennials who are working long hours, raising families, traveling, and taking side gigs. This can make it hard to schedule meetings with your financial advisor. A solution for this issue is video calls, but the adoption of this method is quite slow at larger finance companies. Finding a financial advisor that can fit your busy lifestyle is vital because it can be hard to keep your strategies in place without convenience.
Titles Can Be Meaningless. Many consultants use popular titles - including the “financial adviser” itself – without any specific qualifications. So, don’t assume someone has training, credentials, or registration just because they use an official-sounding title. Be careful and do your own due diligence before trusting a professional. Look for titles such as “Certified Financial Planners” (CFPs) or “Chartered Financial Consultants” (ChFCs). These require rigorous training and minimum experience to be achieved.
Always check the advisor’s credentials. Regardless of what title, designation, certification, or licenses financial advisors claim to have, it’s up to check their qualifications and background.
You know the main aspects you should take into consideration when looking for a financial advisor as a millennial. Now it’s time to analyze and compare the options around you. In many firms work with assisting millennials with their financial planning. When choosing between these options, it is important to compare them in every aspect you can. That is the best way to know you made the right decision. And don't forget to do your own due diligence.
Yes, millennials have a challenging economic future to prepare for. But that is just another reason to find a professional that can help you navigate these circumstances. You want someone who will assist you in building a realistic financial future for yourself considering the current economic scenario that your generation is in.
With the advancements of video call services offered by these professionals, you can also explore financial advisors outside of or even , far from where you live. But if you want an expert based near you, here are the best financial advisors for millennials in
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