Millennials: Much has been written about you. You’ve had all sorts of labels put on you (both good and bad) that ultimately seem to indicate millennials are a unique generation. But is this true for your finances?
While there is much to say about what makes millennials special, the truth is that you are faced with many of the same challenges when it comes to setting yourself up for a successful future: home ownership, building a rainy day fund, saving for your kids’ college.
Millennials have largely avoided the help of financial professionals. So today, we want to look at whether or not that is the right move, or should millennials consider working with a financial advisor in order to reach your life goals.
Millennials are hitting that point in life where you may be ready for a financial advisor
Let’s first consider why people hire financial advisors. Financial advisors specialize in helping people make the big decisions you are currently facing, whether it’s a big purchase like a house or car, or saving up to travel the world, or building an emergency fund so you can start investing.
Depending on which standard you go by, millennials are somewhere between 25 and 40 as of 2021. You’re buying houses, you’re getting married—in other words, you’re settling down.
Millennials are starting to hit the same life milestones as generations before them. And like generations before, you might need some help to guide you through these big decisions.
How you use your money today will have ripple effects for the rest of your life. No one can help you get your mind around the big picture of your financial future than a financial advisor.
Millennials are super DIY, but is it working out in the area of finances?
Millennials, we do actually see you seeking out some financial advice, but the preferred route seems to be DIY.
According to a recent survey, 1 in 3 millennials said they plan to drop their financial advisor and go the DIY route with the help of apps and other tech. Millennials are twice as likely as baby boomers to use robo-advisors instead of human advisors.
The DIY lifestyle can be great, but does it work for finances?
Reports say that 95% of millennials are not saving enough for retirement, with some experts saying millennials will need to save half of their paychecks to get back on track. (The silver lining is that of millennials who do save, 1 in 4 have at least $100k banked already.)
And while robo-advisors are especially popular with millennials, they typically employ blanket solutions that do not take into account the finer details of your life. Even the companies that run robo-advisors recognize this as a shortfall of their approach and are working toward building a hybrid approach that incorporates a personal touch.
Doing things yourself is laudable in many cases, but if you’re not working toward some sort of goals, it may be time to look into working with a professional who can get you on track with a plan.
If you build a plan, you are 10x more likely to reach your goals
As we’ve shown above, Millennials may have some good reasons to consider a financial advisor. But do advisors truly make a difference?
One of our favorite quotes is “A goal is without a plan is just a wish.” And not just because of how true it is: It’s been proven that people with a plan are ten times more likely to reach their goals.
Just like any generation, millennials have a lot of goals in life. Travel, buying a house, putting their kids through college, becoming debt-free…
Unfortunately, most millennials don’t have a plan to get to those goals.
Achieving goals is difficult. There are so many distractions we face every day that make it easy to let our focus slip and forget about those major milestones, but with the right plan in place you can be sure your objectives will get met one goal at a time.
Working with an advisor could improve your outcomes
Not only can a financial advisor help set you up for success with a clear plan, but it’s been shown that they could also potentially help you get better outcomes.
Vanguard estimated the value that a financial advisor adds to an investor’s portfolio and found that working with a professional could add about 3% return per year. For a $1 million portfolio, that’s an additional $30,000 that an advisor is earning you!
Especially if you start saving early, that additional earnings could make a big difference in helping anyone reach their goals.
Financial advisors can not only help you invest, they can help you get on the right path toward the future you want to live. By partnering with a financial professional to build a plan, you can find yourself living the life you’ve always dreamed of.