KNOW: The new Pew Research Center study on the Millennial generation is chock full of insight on what makes young adults (18 to 29) distinct from their elders. They are more politically liberal than older generations. They embrace technology, diversity and body art. But family values (as they interpret them) are supremely important.
DO: This study is a valuable supplement to the research we have cited on Millennials’ attitudes toward their finances. If you are targeting this market, you need to understand how young adults differ from your older clients. The Pew study will provide you a quick education.
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KNOW: Eighty percent of Millennials in Internet-connected households conducted electronic banking within the last month, according to a Fiserv study. They are more likely than older generations to interact with financial institutions via the Internet and cell phone than via face-to-face contact.
DO: Millennials are hard-wired with a bias for digital communication, and that bias will affect how they interact with financial advisors. There is no consensus yet on how financial advisors should adapt. Start experimenting to see what works.
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KNOW: While there are plenty of segmentation schemes identifying different types of Boomers, you’ll earn trust among your Boomer clients if you treat each as unique, with their own specific set of needs.
DO: Within each generation there are similarities you can use for marketing and sales purposes, but it is your understanding of the individual differences that will help you build trust among specific clients.
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KNOW: Healthcare costs are rising so rapidly that they could consume 80% of all increased income by 2035, according to a Congressional Budget Office analysis. Boomers, who will utilize the healthcare system more as they grow older (and often fatter), will be especially hard hit.
DO: Make sure Boomer clients incorporate realistic assumptions about the future cost of healthcare into their long-term financial plans. And give them this advice: A good way to keep costs down is to stay healthy. You can’t control what happens to Medicare, but you can control how much you eat and exercise.
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KNOW: The world is shifting from a global capital surplus to an era of capital scarcity as Boomers transition from their peak saving years to wealth-draining retirement. In its “Equity Gilt Study of 2010,” Barclays Capital forecasts that long-term interest rates on government debt could double by 2020.
DO: If the Barclays forecast is right, the conventional strategy for pre-retirees — reallocating portfolios from equities to bonds — could backfire in the decade ahead. Financial advisors should acquaint their Boomer clients with the risks associated with long-term bonds, especially government bonds, the quality of which, ironically, the mass retirement of Boomers is undermining.
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