Marketing Corner – Marketing to Millennials
Marketing to Millennials: What Advisors Should Know
*This post is the second part of our two-part series, discussing Generation X and Millennials. Read the first part here.
Millennials, Millennials, Millennials. Are you tired of hearing about Millennials yet?
Millennials, it seems, are subject to an endless amount of attention and discussion, from snarky thinkpieces to research attempting to explain this generation. Some of the online discourse surrounding Millennials can come across as dismissive or sociological. While Millennials do have different values than previous generations and are saddled with student debt (an average of $27,000 according to Pew) they are still a target market worthy of effort and attention for financial advisors.
The Millennial Generation is generally considered to consist of individuals born between 1980 and 2000, although many organizations may use other ranges (Gen-We.com suggests a starting point of 1978). What this means, however, is that this generation came of age just as the modern Internet developed and entered the job market just as the Great Recession ravaged the economy. In terms of population, Millennials are the largest generation. Millennials are also the most ethnically diverse and educated generation. In 2015 this generation surpassed Gen-Xers as the largest generation in the American workforce.
So what do Millennials think about retirement?
Well, one study found that this generation grossly underestimates the annual cost of retirement and that a significant amount is banking on winning the lottery (15%) or being gifted money (11%) for their retirement resources. So, there’s that.
More than half of Millennials expect Social Security to be exhausted by the time they retire and nearly forty percent expect reduced benefits, according to the Pew Research Center. In a recent Facebook Insights study of affluent Millennials, 46% indicated financial success as being debt free, while only 13% considered being able to retire as the primary indicator of financial success.
Does this mean that retirement isn’t on the minds of Millennials? Well, not exactly. It indicates that short-term obstacles and the sting of a poor economy have shaped their priorities. Millennials delay typical signposts of success like home ownership and marriage out of generational attitude, yes, but also out of practicality.
However, Millennial participation in 401(k)s has grown in recent years, which may indicate a growing concern for retirement. And this generation has actually outpaced other generations with regards to retirement saving, showing the greatest percentage increase (although Gen-X and Boomers still beat Millennials on cut of salary apportioned for retirement). Millennials also start saving earlier than when Gen-Xers or Boomers did.
In short we have a generation that:
- Is facing reduced earning power.
- Entered the job market just as the economy was crashing.
- May have significant debt.
- For reasons both cultural and practical, delay marriage and home ownership.
- The largest generation ever in American history.
- Currently represents the largest workforce.
- Is risk adverse and conservative with assets
Why You Should Be Prepared For Millennial Clients Right Now
There are many reasons why Millennials represent opportunity for advisors.
Along With Gen-Xers, Millennials are set to inherit the largest transfer of wealth ever, some $30 trillion over the next 30 years. Being unprepared for this generational shift will cause you to lose out significant amounts of money.
According to Investment News, 66% percent of children fire their parent’s advisor upon receiving inheritance. This speaks to the value of maintaining good relationships with multiple generations of a family.
While Millennials face challenges to their earning power, things are improving. In five-to-ten years, many Millennials will be cresting and will be focused on retirement planning more than they already are.
While affluent Gen-Xers have more net worth, affluent Millennials have more assets.
Compared to Boomers, Millennials are twice as likely to discuss saving, retirement planning, and investing with family and friends.
According to Nielson, Millennials have the least ownership of life insurance, when compared to other generations. However, Upscale Millennial (those more established and with more assets) track closely with life insurance ownership for other generations.
Because retirement is so far off for Millennials, they will benefit most from appropriate planning strategies (compared to Gen-Xers who might have 10-15 years left of earning power and Boomers/Pre-retirees that are nearing their ideal retirement age).
How To Reach Millennials
Like their Gen-Xer parents, Millennials are generally suspicious of financial advisors and value doing things themselves. While some segments of the Millennial Generation are prepped for retirement planning, many see it as a far off project. This can derail advisors who woo Millennials with traditional strategies. What some have suggested is focusing less on the idea of “retirement planning” and more on the idea of “financial independence.” This shift in philosophy could address the way Millennials approach finances, especially with the impediment of debt. This shift makes it clear that retirement planning is less about getting to an end point, but rather a continuous strategy that follows Millennials through the remaining phases of their life, especially with Millennials not confident they will be able retire when they would like too, or at all.
Even though this is the generation that grew up with digital integration and gave birth to social media, Millennials value in-person appointments. According to a recent study by the Insured Retirement Institute and The Center for Generational Kinetics, the majority of Millennials (87% of those surveyed) said it was important for advisors with meet with them in person.
Other factors for working with a financial advisor include fee transparency and authority (i.e. highly rated).
The study also found that while Generation Y recognizes the importance of retirement planning and the value of being walked through every step of the retirement process, they are not seeking out financial planners.
Marketing and Media
According to a study by Fractl and BuzzStream, the top five most consumed content types for Millennials are, in order:
The majority of Millennial use mobile devices to access content.
Millennials are more confortable sharing personal information with online businesses, when compared to older generations. This is especially true regarding relevant, targeted advertising and coupons/deals for local businesses.
Direct mail is still useful at reaching younger audiences. According to the 2015 DMA Statistical Factbook (citing the USPS Household Diary Study) 9.0% of individuals aged 25-34 are likely to respond to a direct mail piece. Those aged 22-24 are 8.2% likely to respond to a mail piece. While these stats show a slight decrease from the previous year, one demographic, those aged18-21, had a significant increase, from 4.1% in 2012 to 12.4% in 2013.
–DMA Statistical Factbook via eleventygroup
According to the Pew Research Center, 89% of individuals aged 18-29 use social media. 82% of those aged 30-49 use social media.
Across all demographics, Facebook is the most popular social network.
No surprise, but 86% of Millennials own a smartphone.
YouTube is valuable source for Millennials. According to Google, 67% of Millennials say they can find a YouTube video for any subject they want to learn about.
According to a survey by web video company Animoto:
- 50% of Millennials will read an email from a company if it has video.
- 67% of Millennials prefer a company video, versus a newsletter.
- 4 out of 5 Millennials find video useful when making purchasing decisions.
Basic Marketing Suggestions:
While it is certainly true that members of Generation Y incorporate the digital world into their daily lives, they still value in-person appointments and direct mail. It’s important that you build authority with your branding and don’t provide empty content that will be easily dismissed, even when read. To reach this demographic (and subsets of other generations) you must absolutely have a digital strategy, but this does not mean forgoing the essential value proposition you provide. Rather, Millennials expect to find information about you and your company across multiple platforms and in multiple ways; email, social media, mobile, video, direct mail, and more. While this can seem overwhelming, the great thing is that many forms of digital marketing are cost-effective and can be leveraged across multiple platforms or integrated into other marketing strategies.
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