The next generation of retirement

You may hear some of the younger folks around your office talking about how their weekend was “lit.” It’s the current version of what I grew up with in the early 2000s — “The Bomb.” The next generation is always trying to come up with a new way to describe a good time. For some of you, it was “rad.”  For others of you, “groovy.”

Younger generations not only influence the way we talk; they can change the way we think. We’ve seen this in how millennial employees have affected the way long-established corporations are running their businesses; they’re taking social matters in their own hands, and they’re doing things differently. So why should their approach to retirement be an exception? This generation is taking their “lit” idea a little bit further — to something on “FIRE.”

While 66% of millennials have nothing saved for retirement, there is an opposing movement quickly gaining momentum among the rest of them: FIRE, which stands for Financial Independence, Retire Early.1

A quick Google search can tell you more about this movement, but in brief: For these determined millennials, retirement no longer means stopping work and depending on Social Security at age 63; it means financial independence and flexibility at 35.

While this idea may be a little “extra” (as millennials would say), the concept behind it isn’t. Wouldn’t it be nice to be able to make decisions without taking money into consideration?  “Retirement” isn’t an age — it’s about reaching a point in your life when you can choose to work or not — the same goal many of your current clients may have. And just like your clients, this next generation can clearly use your help.

For many millennials hoping to attain financial independence, their general plan of action is to spend less than earnings and save the difference in low-fee investments. Millennials are scarred by the global financial crisis and tend to invest more conservatively compared to investors in other age groups. However, if millennials start investing now, they have an investor’s greatest asset: time. This means they have a multitude of investment options available that are currently unknown to them.

I think I know someone who may be able to help inventory those options. YOU.

The list of reasons the millennial client group has untapped potential for financial advisors continues to grow. Take your role as educator seriously. Think about engaging your younger clients in shorter-term goals.

  • Engage millennials through ways that are consistent with how they take in information. Fancy jargon and convoluted descriptions are major turn-offs, so present the information in a light-hearted story structure that addresses their doubts for putting off retirement savings. Then, consider using social media platforms allowed by your firm to grab their attention.
  • Retirement planning is overwhelming. Create a few distinct client profiles, and outline what each of these client’s end goals are and their milestones along the way. This will make the process less abstract and more approachable. Emphasize that this is a personalized journey you’ll be on with them every step of the way.
  • Millennials learn from each other more than any other age demographic. What about starting some sort of ambassador program? Identify key millennials who can help spread the word — where to begin with that? Look at your current client base, potentially children of your immediate clients.
  • It’s all about personalization. Make more of an effort to target millennials differently from other participants and closely monitor the effectiveness of these communications.

Let’s help bridge the gap between millenials’ FIRE idea and the execution. With the right mentorship, financial independence is very much attainable, especially with a strong relationship as the foundation.


1Breaking down the basics of “FIRE,” CBS News, 2018

Investment professionals should always consult their compliance department and individual firm policies before accessing any social media or using online communication tools for a business purpose. Any and all communications with the public should be compliance approved and in line with your firm’s guidelines.

Macquarie Group has no affiliation with any vendor or service mentioned in this presentation.

The information provided is not intended to be a forecast or guarantee of future events or results.

All other company, product, and service names may be trademarks or service marks of others and their use does not imply their endorsement of, or an association with, this program.

All third-party marks are property of their respective owners.

The views expressed are those of Erica Kay and do not necessarily reflect those of Macquarie Investment Management (MIM), or any of its employees.

For educational purposes and for investment professional use only. Not for use with the general public.

© 2018 Macquarie Management Holdings, Inc.

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