Millennials Are Finally Building Wealth and Hiring Financial Advisers

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Jim Lao

Partner & President
TvH Financial
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Millennials are self-centered and allergic to commitment. They switch jobs every six months and will never buy homes. And don’t get them started on marriage and kids. 

So go the cliches about the generation whose oldest members were born in the early 1980s. But as more and more millennials enter their 40s, they’re proving that they’re not so different from the generations before them: Raising families, buying homes, moving up in their careers and building wealth.

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The average millennial net worth has increased 23% each year since 2016, topping $278,000 in 2021, according to research firm Cerulli Associates. While that’s significantly lower than Gen X’s $978,964, millennials saw the highest growth rate of any generation. 

As a result of their rising wealth, many millennials are seeking out a financial adviser for the first time.

Finding a trusted adviser can be daunting if you’ve never done it before. Here’s a guide to what kind of planner may be a good fit, how to vet them and what it will cost:

Get started: A good place to start looking is on the websites of planner networks including the National Association of Personal Financial Advisors, the Financial Planning Association, the Garrett Planning Network and the XY Planning Network. You may be able to search by specialty, whether it’s working with the LGBTQ community, expatriates or first-generation Americans, or by area of expertise, such as taxes, insurance, divorce and stock options.

Know what you want: Be clear on what you want to focus on with a planner. Do you want a few Zoom meetings to discuss repaying student loans, or the tradeoffs between paying down debt and saving for a down payment on a home? Some advisers offer packages on specific financial issues.

For an overall analysis of your finances, a written plan can cost from around $1,000 to a few thousand or more, depending on the level of detail. From there, you can implement any recommended changes on your own or pay for a longer-term engagement with a planner.

“Instead of spending thousands of dollars a year on ongoing financial planning, when you might not be ready for that, doing a one-time check-in in the area you’re most concerned with can be really great,” said Sophia Bera Daigle, 38, founder of Gen Y Planning.

Check adviser backgrounds: A simple LinkedIn search can show an adviser’s work history and their training. Where to do a more formal check depends on whether an adviser works for a brokerage house or is independent. For brokers, the self-regulatory organization FINRA has a search engine that shows experience and disciplinary history; it’s pretty bare bones. 

If an adviser is an independent registered investment adviser (RIA), the Security & Exchange Commission’s Investment Adviser Public Disclosure website is the place to go.

You’ll see two important documents there. “Form ADV” shows the number of clients a firm has, assets under management, the fee structure and more. For an even more in-depth look, check out a firm’s “Part 2 Brochures.”

RIAs are held to the fiduciary standard, meaning they’re legally obligated to put your financial interests before theirs. Brokers, on the other hand, can invest your money in products that earn them higher fees or commissions as long as the product is deemed suitable for your age, risk tolerance and so on.

Some advisers are fiduciaries for money they manage for clients, but take commissions for selling products like annuities. 

Know the credentials: One acronym you’ll see is CFP, for certified financial planner. CFPs must have a bachelor’s degree, do extensive coursework in areas including retirement and estate planning, pass two three-hour tests and have at least two years of experience with financial planning. 

Another acronym to know is CFA, for chartered financial analyst. A CFA has expertise in investment management, so the designation may come into play if you want someone to manage money. The CFA Institute says it takes an average of more than 1,000 hours of study, and CFAs must pass multiple four- to five-hour exams and have four years of professional experience. 

If you’re searching for help with student loans you may see the acronym CSLP — certified student loan professional. It’s not in the same league as CFPs and CFAs, but it shows someone has a good understanding of the complexities of student loans. 

If you’re interested in tax advice, a certified public accountant (CPA) or enrolled agent (EA) may make sense. For help with life insurance and estate planning, a CLU, for chartered life underwriter, is a well-respected credential. 

Check out the vibe: After you’ve zeroed in on a few planners, it’s time to set up a call. Some advisers offer first calls for free and others for a small fee. 

Key questions to ask your prospective adviser include: Who is their typical client? What’s their philosophy about financial planning and investing? How will you meet (many planners are 100% virtual now) and how often? What do they charge? And a crucial question to ask yourself: Are they listening to you and asking good questions about your values and goals, or is it more of a sales presentation?

Jim Marrocco runs Thinking Big Financial, which specializes in LGBTQ customers. He starts every client relationship with a discovery period to better understand their history, values and vision. “Money is such an intimate thing that you want to feel comfortable in the environment where you’re talking about this,” Marrocco said.

Be clear on fees:  The cost of advisers varies greatly, often depending on the complexity of your finances. Generally, they’re paid either by commissions on investments and products, or with a set fee. Those fees can be charged by the hour, month, quarter, year or by project.  If you want someone to manage money, as opposed to help you with a financial plan, they’ll charge a percentage of assets managed. 

Rates vary widely depending on the planner’s experience, areas of expertise and the depth and length of the engagement, said Jeff Jones, director of financial planning at Longview Financial Advisors and chair of the National Association of Personal Financial Advisors. He’s seen hourly rates range from $100 to $500, and said project-based and flat fees can range from hundreds to tens of thousands of dollars.

© 2023 Bloomberg L.P.

Jim Lao profile photo

Jim Lao

Partner & President
TvH Financial
Contact Now