Financial advisers can strengthen their relationships with clients by helping them get the millennials in their lives out of their homes.
Having an adult child move back home temporarily can be a bonding experience between parent and child. However, if the relationship starts to fray and especially if the parents' finances start to feel the pinch of extending the extra support, an adviser should deliver words of reason.
The
amount Americans spend on their adult children sometimes goes way beyond the cost of putting a roof over their heads, and having extra utility and grocery costs. They're often covering children's cellphone, car, health insurance and other bills.
“With some kids, if you don't kick them out, they're never going to leave,” said Scot Hanson, an adviser with EFS Advisors.
Homes are filling up more than ever since the financial crisis, and the excuse that there are no good jobs available for younger generations is starting to look weak, according to a recent Pew Research Center report that analyzed government data on people 18 to 34.
About 67% of millennials were living independently as of April 2015, down from 69% just five years ago, the Pew report found.
The share of young adults living in the homes of their parents increased from 22% in 2007 to 24% in 2010, and now is about 26%, the report found. Meanwhile, job availability and salaries have actually increased for this group since 2010.
The U.S. unemployment rate for adults 18 to 35 was 7.7% as of the first quarter of 2015, significantly under the 12.4% unemployment rate for this population in 2010. There even has been marginal growth in weekly earnings of millennials.
(More: Help clients before they become the family bank)
Having so many millennials living at home has economic impacts even beyond their parents, actually hurting the nation's demand for housing, the Pew report said.
Of course, there is one factor that still makes it especially difficult for recent graduates to move out on their own.
More than half of millennials who had student loan debt said it caused them to put off major life events — the most common being buying a home, according to Bankrate.
Financial adviser Donna Skeels Cygan, founder of Sage Future Financial, said parents can get into financial trouble helping kids with their student loans.
“I have clients who are paying all their kids' student loan payments, and its impacting whether they can retire,” she said.
(More: Bankrolling adult kids imperils boomer retirement)
And the shellouts don't stop there. Ms. Cygan said some of her clients also regularly pay for their adult children's car insurance, cellphones and even travel expenses.
But she acknowledged that getting parents to sit down with their kids and explain that they need to be more independent is challenging.
“A huge part is that parents feel guilty; they want to get their kids started with a good foundation,” Ms. Cygan said. “But there's an enormous opportunity cost to keeping adult children on the payroll, so to speak, and most people don't understand that.”
