I am a millennial and an adviser – a combination becoming more common each year. Even so, professional colleagues looking to reach a younger client base regularly ask me how to attract and better serve my often-misunderstood generation. The questions I hear often focus on technology and how to leverage it. But connecting with twenty- and thirtysomething clients really comes down to adapting the actual financial planning process.
It's no longer about picking specific retirement dates and monitoring cash flow. Planning for millennials must strike a balance between life and money by addressing the things clients care about, which often include charitable giving, volunteering and social investing. And nowadays, as young people rally around those in need in the wake of recent natural disasters, it's particularly timely for advisers to understand the why, the what and the how of charitable planning for millennials.
Although some may have fewer dollars to donate than their parents, millennials will define the future of philanthropy. But many advisers overlook the subject entirely until a client broaches it. Failing to discuss things like charitable planning or social investing could result in a failed prospect or the end of a relationship.
THEIR GIVING STYLE
It's a common misconception that millennials are a selfish lot. According to The Case Foundation's 2015 Millennial Impact Report, 84% of us made a charitable donation in 2015. Beyond the statistics, millennials may even be hard-wired for giving, as indicated by a 2013 scientific study that monitored the precise circuits within their brains which control nurturing social impulses.
Despite being known as the 'selfie generation,' millennials use their expansive digital reach not to brag, but to drive the visibility of those in need and demonstrate their giving for others to follow. In spreading the word for causes online, millennials are looking to create or join communities that share a common goal.
Millennials quickly respond to news events, which tends to mean their charitable actions are off-the-cuff (rather than systematized). This type of reactionary giving has an obvious benefit for headline-making crises, like the current hurricane and earthquake relief efforts, but unfortunately means ongoing social issues don't garner the same attention. And, because they don't have a well-thought-out giving strategy, despite caring deeply, it ultimately leaves many millennials feeling unsatisfied in their efforts to do more for causes they feel matter most.
By addressing this dissatisfaction, advisers can forge stronger relationships with a younger generation of prospective clients. First off, advisers need to understand that millennials aren't as inclined to make individual, private donations as their parents. From there, developing a fully conceived and detailed plan to facilitate charitable efforts will define you as as trusted family adviser for your millennial prospects — rather than the disconnected adviser of the previous generation.
CREATING A PLAN
Advisers must initiate conversations with younger clients about charitable goals from the onset of the relationship. It's most important to discuss your client's current satisfaction with giving – based not on a dollar amount, but on how the client feels about his or her giving strategy. I've found that many clients are very often discontented, regardless of how much they contribute, because they haven't put a long-term plan in place.
As with other generations, millennial charitable planning should address ramifications to cash flow and budgeting, along with the type of assets to donate. Using appreciated securities, for example, can allow the client to give more, while taking advantage of a tax benefit. The plan can also determine a schedule for when and to which charities to give throughout the year. Clients will realize that these plans turn giving into a satisfying part of life rather than a guilt-ridden afterthought.
Connecting with a younger generation of clients will continue to require advisers to rethink the planning process. Millennials have fundamentally disrupted what we've forever considered traditional lifecycles, preferences and goals. Just as this generation responds to authentic stories when choosing how to give, they'll hire advisers who genuinely care about creating a charitable plan.
Zachary Conway is an associate with the Conway Wealth Group at Summit Financial Resources, Inc.