Younger generations are interested in developing a strong financial foundation and are eager to seek advice from an advisor to help them—not just for retirement, but throughout their lives, according to a study by Edward Jones.
In conjunction with NEXT360 Partners, the firm announced a survey today that focuses on investors between 18 and 34, which the study referred to as GenNext.
Of the more than 2,000 individuals surveyed, 72% said they believe they will be thriving in five years while 79% believe they will be thriving in 30 years. That was despite 57% describing their financial circumstances as simply surviving and 23% saying they are struggling.
GenNext have a clear understanding of what the barriers are that stand in their way toward financial success, researchers said. Of those that participated, 66% cited the rising cost of everyday items as a hinderance while 47% blamed a lack of financial resources.
However, the survey found the group is willing to take the necessary steps to build for that future, including seeking out advice from a professional. Right now, only 12% of those surveyed work with a financial. However, of those that do not, 41% said they plan to someday and 68% view financial advisors as a sounding board for ideas, according to the survey.
“They don’t have a single source for advice,” said Lena Haas, head of wealth management advice and solutions at Edward Jones. “They’re seeking someone that they can have a real conversation with and who can provide that clarity and help them cut through the clutter.”
Sixty-seven percent of those surveyed said their primary source for knowledge and advice is through a family member, a friend, or a significant other. Meanwhile, 38% get it from a website, while 25% receive it from a financial professional or expert, the study found.
The survey found that when discussing their financial goals with financial advisors, 66% said they prefer to do it in person. And 50% said they prefer to discuss transactions in person.
The study also found that young investors want an advisor that serves almost like a coach, according to Haas.
“There is an opportunity to show the NextGen cohort that advisors are not just for those nearing retirement or have a large nest egg,” she said. “It’s really important across the lifespan because financial advice navigates many of life’s challenges, changes, and life events and makes sense of the abundance of options and information so folks can start off on the right track.”
Among the NextGen group, 67% said getting their finances in order includes getting expenses under control, while 61% said they need to increase their income, and 48% named saving for major expenses and 46% said they need to pay down debt.
“I was heartened by those who are prioritizing their finances and are focused on being responsible for everyday expenses and also increasing their income,” Haas said. “So, they’re thinking about it in the right way.”
In terms of financial wellness, the study found that the standards for what constitutes financial wellness are lower now than they had been for previous generations. The study found that 46% defined financial wellness as being able to live without a financial burden. Meanwhile, 34% defined it as having a solid financial foundation and 20% described it as either meeting or getting close to their financial goals.
While money is important to this generation, for the most part, they see it as a means to pay their bills, reduce stress, and provide comfort, according to Haas.
“We also saw that NextGen likes to have fun. They want their lattes,” she said. “They want their travel, but still not necessarily the traditional trappings of luxury that we’ve sometimes seen in previous generations.”
Finally, NextGen’s perception of work is also changing the way people work as well as retirement, according to Joe Coughlin, senior advisor to NEXT360 Partners. It is a generation that is not content staying in one job and moving up the corporate ladder. They will switch jobs to better their financial situation, or for better technology, or better opportunities, Coughlin said.
“Employers today will have to come up with a compelling value proposition that is beyond simply a paycheck but so much more,” he said.
In addition, this generation was severely affected by the financial crises and how that impacted them and their parents. As such, they put a heavier priority on security thus they are willing to have multiple sources of income. So, if one of the revenue streams is cut off, it will not result in a significant financial burden, Coughlin explained.
To help get this generation to retirement, they will turn to financial advisors and Coughlin pointed out that it will not be just to make those long-term decisions about saving for retirement.
“Advice is no longer, not that it should have been in the first place, primarily about retirement,” he said. “It’s about more we’re seeing what the generation is looking for is anticipatory guidance, not just retirement planning.”