Find financial advisors for millennials who can help with your financial planning needs so you can enjoy life with less money stress.
As a member of Generation Y, more commonly referred to as ‘millennials’, you may be thinking about hiring a financial advisor who understands your unique financial planning challenges and opportunities. Fortunately, an increasing number of financial advisors specialize in serving millennial clients.
Before hiring a financial advisor, it’s important to first consider your own financial planning priorities. In this guide, we’ll share a few quick tips to help you get started in your search and introduce you to financial advisors featured on Wealthtender you may want to add to your shortlist.
Get to Know Financial Advisors for Millennials
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Table of contents
How Much Does a Financial Advisor Cost?
➡️ How Much Does a Financial Advisor Cost? Read the Article
Financial Planning Insights from a Millennial Personal Finance Writer and Financial Advisor
We asked Derek Condon, a millennial personal finance writer and financial advisor, to share his thoughts on financial planning for millennials. Here’s what he said:
Millennials were born between 1980 and 1996, meaning in 2022, millennials are 26 to 42 years old. If we imagine retiring at age 65, that gives us 23 to 39 years to save for retirement.
Investing and saving for retirement is one of those things where a little goes a long way. What I mean is by putting a little bit of money consistently into investments, you can be big results.
Let’s say you invest $100 per paycheck or $2,400 per year for 40 years, and you earn an annual interest rate of 7%. Over the 40 years, you’d have contributed $96,000, but you’d end up with around $480,000.
By investing your money, rather than just saving it, you’d increase your account 5 times over. It doesn’t require any extra work or time, or money. You just have to take the step to put your money in a position where it can be working for you and not sitting idle.
Make the Most of Your Retirement Accounts as a Millennial
As you’re going through life, you’re going to have opportunities for things that will help you out when it comes to saving for retirement like a retirement plan or a pension plan.
Group plans like a 401(k) are a great way for millennials to take advantage of employer contributions. It’s essentially free money. If your employer offers some sort of group plan, look into it and try to take advantage of it. Again, remember it’s important to start now if you haven’t already. Just because you’ve had a plan available to you, but haven’t taken advantage of it, doesn’t mean you can’t now. It’s still free money so take it.
Pay Off Your Debt First
For most people, including millennials, their biggest expense throughout their life is their mortgage or rent. Imagine your current salary, bills, and the lifestyle you fund. But imagine you didn’t have to pay rent or pay your mortgage. That would be such a relief! You’d be able to save so much more money, and the money you make would seem like a ton.
It’s not always about how much money we make but how we spend our money. Putting yourself in a position to spend less means the money you bring in can go further. When you retire, if you could have no credit card debt, no outstanding loans, and no mortgage or rent, the amount you’d need for retirement decreases significantly.
Throughout a lifetime, if you rent or buy a house, I’ve read a lot of perspectives that suggest you could come out about even. For me, the big advantage is what happens after your mortgage is paid off.
Let’s look at two individuals who are retiring. The first is renting, and the second has paid off their mortgage already. Rent is $1,000 per month and doesn’t include utilities. The homeowner will pay property taxes and home insurance ($150 per month), but otherwise, their remaining bills will be similar.
If we run this scenario out for 30 years, age 65 to 95, the renter will have paid $360,000 in rent. The homeowner has about $54,000 in property taxes and home insurance.
Now, these numbers are cheap, even today. By the time you retire, inflation will have pushed prices upwards, and rent never gets cheaper.
By eliminating debts prior to retirement, you’ll have fewer expenses in retirement. Homeownership can seem like a big hurdle, but it’s absolutely not impossible.
I know for most people reading this, retirement is a long way away. If you take little steps now, you will see big results down the road. Remember, a marathon starts with a single step.
How are Millennials Buying Homes?
If you believe the hype, millennials will never be able to buy homes. The boomers think it’s because they consume too much avocado toast and designer coffee, but millennials will point out that the reasons are less personal and more systemic.
The median price of a home in the U.S. in 1950 was $7,354. The average family income that year was $3,300. In 2022 the median price of a home varies hugely from state to state, but in California, for example, is $505,000. The median annual income of a household in the state is $80,440.
Whereas many boomers were able to buy a house that was worth a little over twice their annual income, millennials are looking at the average house being over six times their income.
This, of course, doesn’t tell the full story. The income of many workers is much lower, and high rents make it increasingly hard to save a down payment. A study in 2020 reported that there wasn’t a single US state left in which workers on an average hourly wage could afford rent on a one-bedroom apartment (when defining “affordable” as spending no more than 30% of monthly income on rent), and things aren’t getting any easier.
But somehow, millennials are making it work. In fact, they’re the fastest-growing market segment of homebuyers, according to a recent report from the National Association of Realtors. So how exactly are they managing it?
They’re Buying Later
They have to save the substantial down payment necessary, but also they’re marrying less and later and having kids later, so the rental/roommate model (as well as the living at home model) works better for longer. Pew research has found that just 46% of millennials are married, compared to the 83% marriage rate of the Silent Generation at the same age, the 67% marriage rate of early Boomers at their age, or the 57% of Gen Xers.
They’re Avoiding Rent
Many millennials will say that high rents are the main reason they’ll never be able to buy a home, and it’s true that the cost of rent has increased way too fast for wages to keep up, in most areas. So for many, the only way to save a down payment is to minimize or avoid that rent. Perhaps that’s why 52% of adults between18 and 29 are living with their parents. This percentage of adults living at home is pretty unusual in the US. It is perhaps significant that the last time it was recorded as (almost) this high was during the Great Depression.
They’re Splitting the Cost
The Wall Street Journal recently reported that many millennials are creating housing communes with friends, as it’s just not affordable to buy a home as a single person. To be fair, this makes perfect sense for many of those deciding to opt out of marriage and parenthood or delay it indefinitely.
Being single is expensive in many ways, and splitting homeownership with another person can halve not only your down payment and mortgage but many other living expenses too. It is, obviously, wise to have a basic legal agreement in place as to what happens when and if one of you wants to sell.
They’re Finding the Down Payment (Somehow)
Another thing older generations criticize millennials for is using the “Bank of Mom and Dad” to get hold of a down payment, but the reality is it’s simply not practical for many people on an average salary to save the ridiculous amounts necessary to get onto the housing ladder in some cities.
There are pros and cons to using a gift from parents or other family members as a down payment on a home, but it’s certainly increasingly common. And it’s not just the uber-wealthy who are helping out their kids. In fact, it’s becoming a way for middle-class families to “advance” an inheritance. Parents who have finally paid off their 30-year mortgage, and are happy to downsize from the family home after the family leaves the nest, are often using the proceeds to help their kids get onto the housing market. It really is the only way some of them will ever make it happen.
Millennials were never really kept out of the housing market by avocado toast and lattes. The picture was always bigger than that, and the problems were more systemic. But they are making it work. One way or another. This means the retail housing market is still very much alive, for now.
Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine. Learn More About Karen
Smart Tips for Finding a Financial Advisor for Millennials
Before hiring a financial advisor, here are a few quick tips to help you find the best advisor for you. You may also want to consider getting to know XY Planning Network financial advisors who work with Gen X and Gen Y (Millennial) clients.
1. Decide Which Services You Need
Before hiring an advisor, determine what services you need from them. Whether it’s full-service investment management or a plan focused on a specific area of your finances, put together a list of what you’d like help with before contacting an advisor.
Though most people use a financial planner simply to invest for retirement, this is only a small part of what many advisors offer. Here’s a quick rundown of potential services a financial advisor may offer you:
- Budgeting and money management
- Debt management
- Insurance planning
- Retirement planning
- Other investment planning
- Inheritance planning
- Estate planning
- Tax planning
As you can see, financial advisors can help you with your entire financial picture, not just investing. As you start to plan for life’s bigger milestones, you should consider finding a financial advisor that specializes in those areas.
Finding the right advisor can help you minimize risk, maximize gains and take advantage of tax breaks while investing for your future. They can also help you protect your assets with the right kinds of insurance and help you pass on your financial legacy with a proper estate plan.
2. Consider Your Budget and Payment Preferences
Once you have a list of services you would like, review the fee structures financial advisors offer. Finding a balance between the services you need and the cost of those services will help narrow down the field of advisors you may want to work with.
If you are looking for a full-service advisor to manage all of your investments, consider searching among fee-based financial advisors. If you want to manage your money yourself, consider the flat fee and monthly subscription advisors for ongoing support.
3. Interview Multiple Financial Advisors
Once you have chosen the services and fee structure you prefer, it’s time to contact a few advisors and interview them. Here are questions to ask financial advisors:
- What services do you provide?
- What are all the ways you get paid? (fee transparency)
- What is your investment strategy?
- How do you measure investment performance?
- How do we communicate about my plan?
Interview multiple advisors to get a feel for who you want to work with. A combination of fees, services, and customer service will help you determine the best fit for your financial advice.
4. Review Financial Advisor Credentials
Once you find an advisor (or two) you feel comfortable with, it’s always a good practice to check their credentials and the firm’s details. You can do this at the Investment Adviser Public Disclosure (IAPD) website.
You can check both the individual and the firm to view their background and experience details, as well as any disciplinary action taken against them or their firm.
As licensed financial professionals, there is oversight into how financial advisors conduct business, so running a quick (free) check on them is recommended.
For additional information about advisor credentials, read our article to learn the most popular designations held by financial advisors, as well as specialized credentials which may be important to consider if you have unique financial planning needs.
🙋♀️ Have Questions About Financial Planning for Millennials?
Frequently Asked Questions & Additional Resources
How do I know if I’m ready to hire a financial advisor?
You should strongly consider hiring a financial advisor if you have a significant amount of money available for saving or investing. This could occur after years of making annual contributions to a retirement plan like a 401(k) through your employer or suddenly if you receive a large inheritance or sell your house for a large profit.
But even if you don’t have a lot of money saved, many financial advisors and planners provide reasonable pricing options and valuable services you should consider, especially if you’re facing a significant life event. For example, if you’re starting a new job, getting married, starting a family, getting divorced, lost your job, starting or selling a business, or approaching retirement age, working with a trusted financial advisor or planner may prove worthwhile.
Before I hire a new financial advisor, should I fire my current advisor?
You don’t need to fire your current advisor before beginning your search for a new financial advisor. In fact, your new advisor can help coordinate the transition of your assets from your previous financial advisor.
Where can I read reviews about financial advisors written by their clients to help me decide if I should hire them?
After 60 years of regulatory prohibition of financial advisor reviews in the US, a rule issued by the Securities and Exchange Commission (SEC) became effective on May 4, 2021 that means both financial advisors and directory websites that help consumers search for a financial advisor can collect and display financial advisor reviews, an important factor worth considering when choosing who you’ll hire to manage your investments and life savings.
Wealthtender is the first independent advisor review platform designed to be fully compliant with the new SEC rule, and we look forward to helping you evaluate financial advisors based on reviews written by their clients.
I’m a financial advisor interested in being featured in this guide. How do I get started?
Thanks for your interest. We look forward to learning more about your practice and helping you attract your ideal clients where you may be a good fit based on their individual needs and circumstances. Please click here to learn how you can join local financial advisors featured on Wealthtender.
About the Author
About the Author
Brian Thorp
Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress. Learn More about Brian