MEETING THE FINANCIAL PLANNING NEEDS OF MILLENNIALS IN FACE OF THE ‘GREAT WEALTH TRANSFER’

Professionals say bringing the different generations of a family together for financial planning is the most productive approach. istock.com

It is often called the “great wealth transfer” –  the tremendous amount of wealth that the baby-boom generation will continue to pass on to younger generations through the coming years. Tomorrow’s holders of wealth will largely be millennials, who have come of age in an era of robo-advisers, direct-to-consumer investment platforms and other technology-powered tools for “do-it-yourself” financial planning and management.

Given this expansion of options, millennials have a different mindset about the need for advice from financial professionals. Research from Ottawa-based Public Policy Forum found that these younger consumers are less likely than their parents to seek out professional advice on their savings and investments and are more likely to be skeptical about traditional financial institutions.1

In the wake of the largest intergenerational wealth transfer in Canadian history, professional advisers are seeking ways to adapt to the needs and preferences of younger consumers and to cultivate their clients’ interest in multigenerational financial planning. 

Among those professionals operating in this new environment are Christie Coltman, based in Victoria, B.C., and MaryAnn Kokan-Nyhof of Winnipeg, Manitoba. Both are members of Advocis, the Financial Advisors Association of Canada, and both are Certified Financial Planners and hold a CLU designation – specializing in advising individuals, business owners and professionals in the areas of risk management, wealth creation and preservation, estate planning and wealth transfer.

Adding value for the well-informed millennial 

Both financial advisers agree it can often be challenging to demonstrate to younger clients that a professional can add value, when information on every financial topic is just a click away. But this proliferation of information isn’t always helpful, says Ms. Kokan-Nyhof, with Desjardins Financial Security Investments Inc. (DFSI).

“Having been online a lot more than their parents, millennials have a lot more knowledge, but often it reaches the point of confusion,” she says. “They do all the online trading, they’ve got online banking and everything’s digital, but they look to me to help them make sense of it – and tell them how to put it all together to their advantage through a comprehensive financial plan.” 

“With millennials, I often find you have to take more time to build the relationship and gain their trust,” says Ms. Coltman, with Bewley & Coltman Financial Services. “You do that by showing you’re not just another source of information, but a resource to help them solve their specific financial challenges.” 

Ms. Coltman believes that older millennials, in their late 30s to early 40s, are often more receptive to using the services of professional adviser. “Many of them have managed their finances on their own for several years and now wonder if they have considered all the important factors. When you’re close to 40, planning for retirement becomes more of a reality than when you’re 25.”  

Financial advisers need to educate themselves on millennials’ unique financial values and priorities, say both advisers. 

“One difference is the millennial generation is very socially conscious, very aware of environmental, social and governance (ESG) factors when looking at investments,” says Ms. Kokan-Nyhof. “DFSI is very strong in the area of responsible investing, so we offer multiple choices to meet their needs.”   

“Past generations tended to focus a lot on advice on how to build their wealth, asking what kind of returns I could get for them,” adds Ms. Coltman. “Millennials have different problems, and one area of focus for them is to how to manage debt, whether credit card debt or student debt, which has become common for that generation with the rise in education costs.” 

Ms. Coltman and Ms. Kokan-Nyhof say it’s important to meet millennials where they are in terms of technology. That means incorporating any of their online investments into the overall planning process, and ensuring that, as advisers, they’re equipped to interact through digital means. Ms. Kokan-Nyhof says, for example, she made the transition to an online appointment-booking system, which she recognizes younger clients particularly appreciate.

 Multigenerational financial planning  

A key component of successfully transferring wealth is clear, two-way communication between the generations, and both advisers say they encourage families to work together to manage the transition. The guidance of a third-party professional can bring a much-needed objective perspective to what can be emotional conversations and decision-making. 

“It’s an ideal scenario for a financial adviser,” says Ms. Kokan-Nyhof, as she described a planned meeting that involved four generations of one family. 

“It’s a farm family, and our meeting will include the mother, her son with his wife and their two sons, and now there’s a new little one to consider in the planning,” she says. “It’s very rewarding and valuable to be able to bring the entire family together and prepare a plan that will benefit all the generations.”  

1 “Millennial Money: Financial Independence and Well-being for the Next Generation.” Public Policy Forum, November 2018. 

To view this report on The Globe's website, visit globeandmail.com

To view the full report as it appeared in The Globe's print edition: Financial Planning Week