Creating habits to achieve your goals
Most successful people, and especially successful financial professionals, have good habits in place.
Some of the most pivotal events of the 21st Century occurred during the formative years of the Millennial generation. For me and all other older Millennials (those of us born in the 1980s,) we entered adulthood at the turn of the century and witnessed the tragedy of September 11th and the panic of the Global Financial Crisis. The COVID pandemic added another tragic episode to this time of tumult and uncertainty.
Still, Millennials have come of age with a feeling of confidence and a sense of optimism about the financial future. Millennials are more optimistic than older generations, and that optimism has increased over the past year. In 2021, our Advisor Authority study, powered by the Nationwide Retirement Institute®, found that over half of Millennials (54%) were optimistic about the future, up significantly from 38% in 2020. Millennials are also more confident than Boomers and Gen X investors about their ability to protect their finances and investments in the event of another significant financial crisis.
You could say Millennial investors didn’t grow more confident despite the crises of the last 20 years but because of them. We never fit the stereotypes that were written about our generation years ago. Now, we’re showing how the lessons we learned from living through past financial crises can shape a positive outlook for the future.
Now that the Millennial generation is well into adulthood, many of us are thinking more about retirement planning. It’s never too early to start saving and investing for your financial future, but for many Millennial investors retirement planning used to take a back seat to other more pressing financial priorities.
But that’s changing as Millennials get older. We are by and large adopting a more active approach toward retirement planning, a lesson learned from living through past financial crises. Our Advisor Authority study revealed that three out of five Millennial investors feel confident about their ability to prepare for and live in retirement, based on their experience from previous financial crises.
Moreover, three-quarters of these investors (78%) have a strategy in place to help protect them from outliving their savings. The top solutions these investors have in mind for this goal include Social Security planning, in-plan income guarantees, dividend-yielding stocks and deferred income annuities.
Even with the confidence that comes from experience, it’s still possible to make choices that lead to financial setbacks. As an example, the market havoc during the Global Financial Crisis of 2008 had a big impact on Millennial investors; 30% of them reported they had sold assets from qualified retirement plans (e.g., 401(k)s, IRAs). For many of these investors, that decision had a profound impact on how they approach investing today.
Millennials are now the largest generation in the U.S. and will soon hold the majority share of the country’s wealth. We’re also seeking to manage a range of financial priorities, from paying off student loans, to saving for their own children’s education, to building savings for their retirement.
This may help explain why financial professionals are keen on forging relationships with Millennial investors; 41% of financial professionals said they are focusing on Millennials as top prospects for new business, according to our latest Advisor Authority study.
A large percentage of Millennial investors (66%) are already working with a financial professional or advisor. That’s a positive trend that the financial professional community can build on.
What about the other third of Millennials who haven’t sought out financial advice? Remember that our generation tends to believe we can learn things on our own and do just as well – not only financial planning but nearly everything!
One idea for financial professionals to reach prospective Millennial clients is to share your perspectives on certain topics, which shows a willingness to help people help themselves. Another thought is to focus Millennial investors on building a sense of security. That’s the top reason for working with a financial professional, according to our Advisor Authority study.
When the next financial crisis does happen, a relationship with a financial professional can be valuable to Millennial investors – and all investors at any age – when markets turn volatile. During these periods, financial professionals can show their value by helping investors keep their emotions in check and avoid making decisions that could lead them off-track from their financial goals.
Additionally, financial professionals can bring a holistic viewpoint to a client’s complete financial plan, assessing the different risks a client may face – including ones they may not be aware of. Objective guidance on a range of financial challenges, from managing debt to protecting assets to long-term planning, can also provide a Millennial client with a greater sense of security knowing they have a strategy in place for whatever the future may bring.
This material is not a recommendation to buy or sell a financial product or to adopt an investment strategy. Investors should discuss their specific situation with their financial professional.
Nationwide Investment Services Corporation (NISC), member FINRA, Columbus, Ohio. The Nationwide Retirement Institute is a division of NISC.
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