When budgets are on the table for discussion with younger clients, it's the perfect time to talk retirement lifestyle goals and expenses and check if their super savings are on track.

Engaging younger clients about saving for retirement is no easy task, especially when they have other priorities on their minds. A global study by With a public health crisis dominating the headlines in 2020, the list of issues weighing on their minds is growing

Millennials, born between 1982 and 1995, also have low superannuation balances, making it challenging to get them more involved in a topic of little interest to them, according to Roy Morgan. Their research found millennials make very little use of financial planners and are instead much more reliant on their employers (89.1%) because super is their dominant wealth management product. Generation Z, born between 1995 to 2010, is similar, with 91.7% relying on their employer. Roy Morgan also found that younger Australians are more likely to ask friends or family for advice about retirement planning than older Australians.

The budget-conscious generation

So where does a planner start to build relationships with younger clients and begin talking about retirement? A good time can be when budgeting or saving discussions are on the table. A study commissioned by Afterpay found that more than 80% of Australian millennials budget, compared to two-thirds of older generations. Millennials are also better savers than their parents, with 36% saving regularly compared to just 28% of older Australians.

Millennial priorities and values

Yet, survey after survey has found that millennials are uninterested and unengaged with their superannuation. According to a Deloitte survey, having children, buying homes, and other traditional signals of adulthood “success markers” do not top their list of ambitions. The goal of owning their own home (49% is only slightly more important to them than making a positive impact in their communities or society at large (46%). Starting a family of their own (39%) is an even lower priority.

The Financial Services Council (FSC) says millennials’ lack of engagement with their super is partly reflected in the fact that they tend to hold multiple superannuation accounts. They are often unaware that this is the case, mainly because they simply select the default fund when starting a new job.

Yet, the FSC says the idea that 18 to 34 year olds aren’t interested in their retirement savings journey is not based on the facts. Locked out of the housing market, experiencing record low wage growth and low interest rates on any savings they have, this generation understands all too well the importance of money and growing wealth over the long-term.

The FSC advises appealing to what’s important to millennials, by making it easier for them take into account their environmental, social and ethical values in decision-making. As John Purl AFP®, senior financial adviser for Affinitas Capital and co-host of podcast Strive 168, notes: “You’ll struggle to get anyone to stick to a cash flow, budget or savings plan, if it does not align with their true values. The values conversation has the greatest impact on their motivation to make changes. Then you follow up with a specific process to determine what needs to change.”

Once you understand your younger clients’ values, it becomes easier to explain why super and retirement savings are important. After all, super equals 9.5% of their salaries and is scheduled to rise to 12% by 2025. We are living longer and longer. Small steps can make a big difference later, and the earlier they start, the better off they will be.

The technology effect

The FSC says millennials engage very quickly when financial services and products are provided to them on the right platform – their smartphone – and are simple and easy to use. They also don’t tend to benchmark their superannuation service against other super funds, or even other financial services they use, but against Uber, Airbnb and Deliveroo.

Similarly, research by MetLife Australia shows how important a digital experience is for millennials. Indeed, 74% were open to completing an online form before seeing a financial planner. They also found that younger audiences are more open to planners communicating with them digitally versus the older generation. They also want to hear from their planner more regularly.

However, trust is still an important factor for millennials. For example, when it comes to insurance, over a third (37%) will conduct their own research after a recommendation from a planner, by visiting the insurer’s website and reading online reviews.

Getting the most from conversations

All this isn’t to say that the conventional, face-to-face model is going away. However, MetLife says it does mean that advisers need to think through how they can develop new digital advice solutions to drive an increase in millennial clients.

They also need to work out how to connect with this new breed of clients. Some basic tips include:

• Stop selling products and start conversations.
• Let them tell their story.
• Don’t make assumptions. Ask and listen.
• Keep it short.
• Give them options so they can do their own research.
• Show your purpose.