tumultuous nature of their careers may cause them to
put off retirement saving until their situation is more
settled. It’s not that saving isn’t important to them;
the train of thought may just be, “I can make that up
when I’m older and earning a higher wage.” They
may also be inclined to treat their retirement plan
as a glorified savings account. You can help them
understand how their employer-sponsored plan works,
with a focus on leveraging matching employer
contributions and avoiding the tax consequences
of early withdrawals.
Beyond the Basics: Asset Protection Planning
While it’s important to address the fundamentals of
spending and saving, millennial clients also need asset
protection planning. As the
Wells Fargo Millennial Survey
notes, this group is optimistic about their future prospects
and their ability to control their financial situation. Addressing
these clients’ estate planning and insurance needs is a great
way to protect their dreams for the future.
Estate planning
is
for the young.
Everyone needs an estate
plan; most young people need only a simple one. Because
millennials may be looking for the easiest, most cost-effective
option, they’re likely to gravitate toward do-it-yourself
online resources. Unfortunately, too much information is
lost by online questionnaires, and the offerings tend to be
cookie-cutter planning, sometimes with the option to contact
a local attorney. Instead of letting clients go that route, why
not take charge of their estate planning from the start?
•
Identify their needs.
As you get to know the client’s
basic financial picture, start talking about his or her
estate planning goals. Topics can be as simple as
naming someone to turn to in a time of need or
discussing who should be put in charge of the client’s
estate. Sometimes, the most simple-sounding
considerations can be incredibly important to the
client. For many, this will be the first time they’ve
thought about their future in this way.
•
Be the quarterback.
Start preparing your attorney
referral partners with the idea that you will “quarterback”
the relationship. Can you schedule an initial meeting
with all parties so that the client doesn’t need to make
trips to multiple offices? Would the client prefer to
talk via conference call or Skype? Saving time can be
a big motivator for busy young professionals. Also
prepare the client for what to expect in terms of the
process and potential costs. Millennials are adept at
online shopping and price comparison, and helping
them understand their purchase will go a long way.
•
Help them interpret the attorney’s recommendations.
For singles or couples without children, an estate plan
will likely focus on three areas: financial powers of
attorney, health care powers of attorney, and wills.
Millennials are known as information gatherers, and it
will be important for them to have a sound grasp of
their estate planning. As families or finances grow,
more complex trust planning may be folded into the
picture, and a review of asset ownership and beneficiary
designations can round out their planning.
•
Don’t forget digital assets.
Younger clients probably
haven’t considered what will become of their digital
information after they’re gone. They likely have
online profiles for their investment, savings, and
retirement accounts; consumer credit cards; and a
variety of other financial and nonfinancial activities.
As part of the estate planning conversation, help the
client catalog and plan for the disposition of these
digital assets. Who will have access and passwords?
Who will get ownership of assets with value?
Insurance can help safeguard a bright future.
For
millennials, insurance coverage probably takes the form of
basic motor vehicle and renters or homeowners policies. It
According to the 2013 Wells Fargo
Millennial Survey, only 8 percent of
millennials aged 22–32 report working
with a financial advisor.
Wealth Management
/ Planning
12
For Advisor Use Only
March/April
2014
