Emerging adult clients want to retire at 61, though they haven’t started planning for retirement yet

Financial advisors report that their emerging adult clients (ages 18-34) want to retire at 61, three years ahead of clients who are 35 to 64 years old, according to research from Edward Jones and Morning Consult. Despite this desire to retire at an earlier age, many of them haven’t started planning for retirement yet.

The research sought to understand how financial advisors will need to pivot their discovery conversations as they seek to provide deep personal relationships and comprehensive planning and advice to GenNext, the next generation of clients and investors.

Survey’s implications for financial advisors

From a financial-advisor perspective, this survey really underscored that the next generation of investors has a bright financial future, but many don’t know how to go about planning for it, said Julia Bartak, a financial advisor with Edward Jones.

“Our data found that financial advisors’ GenNext clients want to retire at 61 – three years ahead of the generation before them but are less focused on saving for retirement than their parents or grandparents, “added Bartak. “Instead, they are prioritizing family planning (30%), everyday expenses (28%) and investing (23%).”

This contradiction of wanting to retire earlier, but not prioritizing retirement savings, may boil down to information overload, explained Bartak. NextGen consumers are information omnivores, with access to many different resources. But they often haven’t been counseled on the tools available to them to help prioritize creating a short- and long-term financial strategy.

In fact, Bartak pointed out, only 12% of GenNext respondents discuss their finances with a financial advisor today, with 68% of respondents believing they don’t have enough income or savings to seek professional financial advice, despite many of them being in strong financial standing.

This is largely because while this generation is still focused on saving long-term, they have a short-term mindset when it comes to finance. Younger investors need guidance when it comes to strategy, and often benefit from working with someone they trust to help consolidate and digest the information, putting a strategy together for them, according to Bartak. “There’s a huge opportunity for financial advisors to not only educate their younger clientele, but be a resource for their financial needs,” she said.

Pivoting the conversation

To provide deep personal relationships and advice to their GenNext clients, advisors should pivot their discovery conversations with them. To do this, Bartak said that they should first listen and understand their clients’ priorities to put a personalized, comprehensive plan in place.

With many GenNext clients experiencing or aspiring to experience traditional life events such as marriage, home ownership, or the eight in 10 who have or want children, there is an opportunity for financial advisors to help clients set long-term goals as they juggle jobs, school, gig work and more, Bartak added. “Once we have more clarity on what is most important, we can have conversations to help them feel more comfortable with their long-term approach,” she said.

To begin those conversations, it’s important to take an early approach by reaching out through their parents who may be current clients, Bartak added. This is an easy way in which financial advisors can begin building a deeper connection with this cohort and include them in already-happening conversations.

And doing these conversations in-person is an important consideration, Bartak said. Despite growing up digital-first, GenNext does value face-to-face connections – including in the financial-advisor relationship. “Our GenNext study showed 66% of those GenNext respondents who have a financial advisor preferred in-person interactions with them. There is a preconceived notion that they want to do everything from their laptop, but they want 1:1 interactions, and a coach to guide them through the financial journey,” she said.

Financial advisors can also take an education-first approach. They can lead with education to have clients understand the financial advisor role, their role, and how working together can help make things easier – and build trust.

Setting goals

According to Bartak, long-term goals, like retirement, are at the forefront of many conversations, but the key to success with GenNext clients starts by helping them develop a strategy for how to approach all their short-term goals. When faced with too much information and too many conflicting goals, anyone would have difficulty without guidance. “Financial advisors have an opportunity to help GenNext investors make sense of the information and anxieties they encounter,” she added.

Ultimately, GenNext has many goals similar to those of the generations ahead of them, Bartak added. They aspire for life events, such as marriage, home ownership or having children. They are aiming for a meaningful life and want to be comfortable and are working hard to get there – often wearing different hats to fund their lifestyles and are highly mobile in the workplace to reach their goals.

“The best thing financial advisors can do is listen to their clients and not box them in,” Bartak said. “This is the most educated generation in history, with one in three having some college education and access to information – they are smart and capable. By taking the time to get to know their goals, we can tailor a strategy to help them meet those goals most effectively.”

The survey was conducted by Morning Consult among 200 financial advisors nationally from October 14-16, 2023.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com. 

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