“I talk to clients about whether they are managing their debt efficiently; that advice is as valuable to them as managing their asset,” says Mohrmann. “At the end of the day, I want to be able to show them that by working with me they’ve saved themselves more.”
Some young clients have to be coaxed into saving.
“Savings rates are not at 10 or 20 percent,” says Morgan. “Most millennials can meet their basic needs, but don’t realize that how they’re met in retirement comes down to savings behavior. The digital tools don’t instill discipline.”
Some frame saving as something other than a retirement plan. Marcott responds to his clients’ reluctance by having them save in different vehicles.
“It’s still a focus, but the percentage of assets saved towards retirement are less,” says Marcott. “We save in vehicles that don’t have restrictions of a retirement. Maybe we do a Roth IRA contribution, that has more flexibility; maybe we do 401(k) up to the match and the rest in a non-qualified brokerage account.”
Advisors may need to change fee models to serve young accumulators. XY Planning’s fee model—a onetime on-boarding charge, then a monthly retainer—seems to suit millennial finances.
For Marcio Silveira, adopting the retainer-fee model led to a millennial-focused practice.
“I wasn’t paying attention to millennials until I realized their demand wasn’t met by traditional advisors,” Silveira says. “I had started a firm marketing to boomers. It was petering out, but I had interest from younger folks who wanted this hourly model. I realized this was an opportunity.”
Through the retainer model, advisors grow their practices as they improve clients’ finances. But not all XY Planning firms are alike. Landes structures fees based on 1 percent of family income and 0.5 percent of net worth.
“I add more value if a fee can adjust to meet a client where they are,” Landes says. “I haven’t gotten to either extreme of that scale. We don’t go negative with the net worth, or I might be paying clients, especially those with student loans.”