Financial Planning for Millennials: Yes, You Can Afford It

Filed under: Family Money, Personal Finance, Retirement Plans, Planning, Financial Education

Wells Fargo recently released a study on millennials and their money, and among its revelations was that 80 percent of Gen Y'ers surveyed* said that seeing the impact of the Great Recession on their elders taught them how to save and survive.

But more than half reported that they were living paycheck to paycheck, and 42 percent said debt was their biggest financial concern. Even though Gen Y understands the importance of saving, they feel like they can't afford to put away as much as they should: 46 percent are saving between 1 percent and 5 percent of their incomes for retirement.

Given all that, you'd expect that millennials would really want some professional financial advice -- and they do. But while they'd like the help of a money pro, most don't feel they can afford it: 55 percent think they don't have enough money to get the assistance they need.

The good news for them is that they're mistaken: While that affordability disconnect may have existed in the past, a new way of providing financial planning advice is gaining popularity. Planners who work on a monthly retainer are good news for millennials.

Why the Financial Services Profession is Changing

• Gen Y advisers see that their peers are not being serviced but are asking great financial planning questions (for example, "Should I contribute to a 401(k) or a Roth IRA?").
• There's a shift afoot to get away from pushing commissioned products that clients don't actually need.
• Advisers want to serve a broader client base, regardless of their accumulated assets.
• Advisers are placing greater emphasis on the power of financial planning, rather than focusing solely on investment advice.

How Financial Planners Are Making Advice Affordable

What if you could work with a financial planner for the price of your monthly cell phone bill, would you? A new group called the XY Planning Network is providing fee-only financial planning on a monthly retainer so that you can do just that. These certified financial planners are all geared to help Gen X and Gen Y clients with their money. I'm proud to be a founding member of XYPN.

I work with clients in their 20s and 30s across the country, and I'm 30. Here are some reasons I've noticed why most people prefer to work with a financial planner of the same generation:

• Gen Y advisers can directly relate to the needs of Gen Y clients. We are in a similar life stage and often have similar values. For example, I love to travel, and all of my clients value travel as well.
• More flexibility in how they work. I work virtually with my clients, and this is ideal for them because it is easier to schedule a meeting after work or on a Saturday. There's no commute, and they don't have to take time off of work.
• It's not all about retirement planning. Financial planning for millennials includes budgeting, strategizing around student loans and other debt, building savings, tax planning, buying insurance (or not), choosing company benefits and a whole lot more.

I continue to be impressed by how many millennials have plush emergency funds, are making six-figure incomes, and have paid off thousands of dollars in debt. We have witnessed two major stock market crashes in our lifetime, have seen our parents struggle and/or succeed financially, and ultimately want to make smarter choices with our money (even if it's just to be better with our money than our friends).

*(Survey respondents included 1,639 millennials between age 22 to 33, as well as 1,529 baby boomers age 49 to 59.)

Sophia Bera is a virtual financial planner for millennials and the founder of Gen Y Planning. She is location-independent but calls Minneapolis home. Do you want to be better with your money than 90 percent of your friends? Then sign up for the free Gen Y Planning newsletter.

 

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