Andy oversees the breadth of go-to-market initiatives for Advicent, including product marketing, lead generation, public relations, and partner learning and development. He is interested in always discovering new tools for brands and businesses to more effectively reach their audience and improve metrics for success within their own organization.
Last month, Capital Group published a survey that outlines shifting trends around how Generation X and millennial parents are discussing financial topics with their children.
According to the survey, the goal was to explore “the parent-child dynamic and what can be done to better prepare the next generation of Americans to be financially savvy.” As the great generational wealth transfer looms, advisors should be concerned with how their guidance trickles down to their future book of business now more than ever.
So let’s unpack some of the survey’s key findings.
The younger generation is engaging in household finances earlier than in past decades
Of the millennial parents surveyed, 39 percent said they would start telling children at age 12 or younger to start saving early. This is in stark comparison to their baby boomer counterparts, of which 22 percent would make the same suggestion.
In many respects, this elevated premium on financial literacy amongst younger parents is wholly sensible considering contemporary financial challenges the generation faces. Median income amongst 25-to-34-year-olds has decreased 20 percent since 1989, according to a 2017 Young Invincibles study. It is plenty sensible to assume that leaner incomes amongst young families would be associated with a stronger propensity to encourage financial best practices as early as possible.
It’s never too early to talk retirement
One of the odder set of responses from Capital Group’s recent survey surrounded the topics on which parents currently are or plan to discuss with their children. Saving and financial responsibility topics – such as building credit and retirement saving – ranked the highest while life moment topics – such as saving for college or buying a car – ranked the lowest.
Ostensibly, this doesn’t make a ton of sense. Discussing retirement savings with an adolescent seems like a much less comprehendible lesson than discussing a goals-based car purchase. However, lessons around broader financial responsibility may likely lead to much more sustainable budgeting behavior than a single short-sighted purchase would.
Financial advisors aren’t only expected to educate their clients
An interesting highlight from the survey indicated that 41 percent of participants viewed financial advisors as individuals most important in preparing teens and young adults – behind only their parents and school. Equally interesting is how parents indicated a low preference for both employer accountability (35 percent) and online applications (31 percent).
Obviously for an advisor to begin taking a substantial role in an heir’s financial wellbeing, that individual needs to be closer to adulthood than the previously mentioned 12-year-old threshold. Still, when considering how that educational responsibility may manifest itself into practice, advisors must understand how younger audiences already plan to engage with their finances. While parents may not expect online applications to play a major role in financial education, given the survey results, advisors can still anticipate the next generation of investors to expect digital access to information.
To learn more about how Advicent is empowering advisors to provide digital client experiences, click here.