There’s nothing new about a desire for change in the coming generation. However, millennials are better equipped to make positive changes by virtue of their skills and education, which exceed those of any previous generation at the starting point of their careers. Millennials have shown to be more philanthropic, and are more willing than their older colleagues to devote their time, resources and energy to help others.
In Canada, there are as many millennials as baby boomers in the population, but millennials now represent the largest component of the labour force. This trend will magnify as younger millennials enter the work force and older boomers and generation Xers retire.
Despite the economic challenges they face today, millennials are focused on developing themselves and their careers. The choice to pursue further education, including postgraduate degrees, often has to be traded off against the accumulation of additional debt. According to the Canadian Federation of Students, Canadian millennials carrying student debt owed an average of nearly $27,000 in 2015.11 For those working part time, or still trying to find employment in their chosen fields, this level of debt can limit their options and development.
BMO Wealth Management commissioned a survey to find out what Canadian millennials thought about a number of issues that uniquely affect them.12 Carrying too much debt was cited by 29% of millennials surveyed as the one financial issue that concerned them the most. Financing large expenditures such as a home purchase or a wedding (22%) and saving for retirement (14%) followed. Older millennials (aged 25–34) were more than twice as likely (19% vs. 8%) as younger millennials (aged 18-24) to be most concerned about saving for their retirement.
When asked which personal traits they most value, the majority of millennials surveyed chose honesty (81%), loyalty (62%) and responsibility (52%).
The survey respondents also felt that the most important characteristics required for them to achieve success today are confidence (25%), resiliency (19%), proactivity (17%), the ability to innovate (14%) and flexibility (11%). These values are universal and are relevant from generation to generation.
A recent federal government study found that millennial Canadians aged 28–34 are better off financially than any preceding generation at this age. While the report highlighted the high average net worth of millennial Canadians, concerns were raised about the disparity between the wealth held by millennials at the top of the income spectrum compared to those at the lower end.15 These concerns were echoed in the survey results. When asked which three personal matters they were most concerned about, the top three answers were shared by almost two-thirds of all survey participants.
As a group, millennials have an opportunity to increase their financial literacy. A recent study by PWC found that millennials tend to have inadequate financial knowledge. Only 24% of millennials in the PWC study demonstrated basic financial literacy and a scant 8% showed a high level of financial literacy. This lack of financial expertise may have an impact on the ability of millennials to attain the financial success they desire. Participants in the BMO Wealth Management survey were asked to name their highest financial priority. Paying down accumulated debts was most frequently cited (23%), followed by finding meaningful or better paying work (17%), purchasing (or upgrading) the home (16%) and improving their education (14%).
Saving for longer-term goals, such as retirement or specific larger purchases, was only priority for a minority of millennials surveyed.
According to the survey, millennial men are more worried about their level of financial knowledge (39%) than millennial women, of whom a still significant minority (29%) are concerned. Gaps in financial knowledge also become more of a concern as income increases.
Working with the right financial advisor can provide you with support and guidance to answer your questions about making the most of your financial resources to address each of your personal financial goals and priorities.
The millennials surveyed were asked for the top three characteristics that they look for in a financial advisor. These included the ability to provide personalized advice (58%), knowledge and experience (55%) and a high level of service and ongoing communication (47%). Such responses could apply to any generation, although more millennial answers like socially responsible investing and the use of innovative technology were also cited, but less frequently.
While not as highly rated as personalized advice and experience and service in the survey, using innovative technologies can help financial advisors improve the way they communicate with millennials, presenting information in a format that they prefer. Digital solutions provide a quick and efficient way to access information, share data and communicate, but nothing can replace the value of a strong relationship and timely, personalized advice.
The development of a financial plan may help to prioritize your goals and determine the actions that can be taken to achieve them. The right financial advisor also can provide information and guidance that will help increase your financial literacy in the areas specific to your financial concerns.
The idea of working with a financial advisor to improve your financial skills is similar to the way that hiring managers are looking to tech-savvy millennials for the skills that prior generations of workers may lack.21 When a knowledge gap is recognized, employers seek to hire talented people that have the education and expertise to improve the results of the team.
With the convergence of new technologies and the growth of the millennial working population, many businesses are trying to figure out what the next trends will be22 and how to capitalize on them. Millennials are uniquely positioned to help in this process with their ability to grasp and use the new technologies which are having a growing impact on society.
Some millennials will also benefit from the generosity of baby boomer parents that pass on some of their accumulated wealth to the next generation. Managing all of these changes will be an important challenge going forward.
It takes time and experience to grow the wealth that you will earn and receive, and with the right BMO financial professional as your partner you can be better positioned to meet your goals.
Contact us today if you resonate with any of this or if you have any questions at all.