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Thirtysomething Clients and What Makes Them Tick

Millennials “need to have a stable income and pare down debt,” says Kayleen Schaefer author of "But You’re Still So Young: How Thirtysomethings Are Redefining Adulthood."

Most financial advisors are over 50 and have been in the business for at least 20 years. Many have children in their thirties. Still, appealing to millennials has proved difficult for some wealth managers and a new book might help them better understand what the generation is facing and how they can help them.

Kayleen Schaefer’s But You’re Still So Young:How Thirtysomethings Are Redefining Adulthood (Dutton 2021) chronicles the lives of eight people in their thirties. Many are struggling financially: some are gig workers and some have lost their jobs. Others are struggling to save while some are just building nest eggs.

The dominant depiction of those in their thirties is one of a generation adrift, unlike the baby boomers, who seemed more focused and enjoyed better opportunities. 

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Schaefer points out that 53% of Americans aged 21 to 37 have received some sort of financial assistance from a parent or family member to pay for rent, food, heath insurance, and cell phones. She also noted marked racial disparities. The average white millennial has saved $26,100 compared with only $5,700 for Blacks and $14,690 for Latinos.

Several of her subjects are weighed down by college debt. Many delayed marriage because of career uncertainty and disruptions. She noted that 72% of people in their thirties married in the 1960s compared to about 50% of millennials today.

She argues that thirtysomethings should aim to reach milestones at their own pace and not feel pressured to keep up with when previous generations had done so. For the most part, millennials are “choosing in many cases to marry later, getting multiple degrees and finishing school later, choosing to go back and live with our parents, and choosing to have children or not, so these are all choices we’re lucky to have,” she points out.

But financial constraints — namely student debt — prevent many from achieving their goals. “If you don’t feel financially secure, do you feel ready to get married and have children and take on a mortgage?” Schaefer asked.

Because of outsourcing, AI, and widespread disruption, change is a constant. Millennials often end up — as Schaefer did — in the gig economy, gravitating from one freelance job to another. “Thirty years ago, you wouldn’t take a job without benefits,” says Schaefer, 42, who was raised in Grapevine, Texas and graduated from the University of Texas-Austin.

The bottom-line effect is “not building up savings, in many cases, paying out of your own pocket for Obamacare, and you’re easily disposable. Tons of people have lost jobs, and it leaves this feeling of ‘I can’t take a deep breath and feel secure,’” she explains.

Baby boomers were known for achieving five milestones: completing school, leaving home, becoming financially independent, marrying, and having children. In the 1950s, most baby boomers checked them off in their twenties. In 2016, only 24% of people had achieved those five milestones.

Like many in his generation, Marcus, who Schaefer interviewed, has switched jobs repeatedly. He’s sold phones at AT&T, oversaw a hotel in the late-night shift, and assembled computers at a Dell warehouse.

When he finally landed a job with a six-figure salary, he wasn’t passionate about the position. His dad urged him to stay, saying, “Why don’t you work hard, retire and you’ll have a nice retirement.” Marcus chose to keep looking for a career that excited him.

Charles, another subject, hadn’t completed his college degree yet was still saddled with hundreds of thousands of dollars in student debt. “We’re told that these advanced degrees are necessary to keep pace with the knowledge economy, but you end up being stuck with debt. It keeps you up at night,” Schaefer notes.

“Most of us don’t have the security that workers who came before us did,” she concludes. Schaefer, a former editor and writer at Women’s Health and Yahoo, become a freelance writer before writing books.

In the book, Schaefer acknowledges feeling privileged. Her parents and scholarships paid her tuition, leaving her without debt. They also provided the down payment for a one-bedroom apartment in Brooklyn.  She strives to save and invests in the stock market but has never hired a financial advisor.  “Maybe I should,” she exclaims.

Schaefer acknowledges that she’s done a lot of soul-searching. She lives with her boyfriend and has a 14-month old son with him but would love to be able to afford a larger space for the three of them. “I have this career that no one can take away from me, but you learn that you have to keep going.”

Asked how financial advisors could better appeal to thirtysomethings, she replies, “It’s hard. So many people have so much debt. Why take this money and invest rather than paring down your own debt?”

“No matter how much money you have to invest, you still have to pay down debt, unless it gets wiped out by the government. Maybe it will all be forgiven,” notes Schaefer. If the government did eradicate college debt, it would free up considerable capital for paying for a mortgage, enabling more people to get married and have children, or take their savings and switch careers to do something they really want to do.

Schaefer noted that baby boomers are expected to transfer $30 trillion to the next generation when they die. But she also notes that this intergenerational transfer of wealth is almost all attributable to white families, not Blacks or Latinos. “It’ll stratify differences between races in age groups even more. If white families get even richer than people of color, there’ll be more financial differentiations,” she says.

Reid Cramer, a fellow at the New America think tank and previously director of its Millennials Initiative, observes, “Even before the Covid recession, incomes for most young adults had been largely stagnant during the protracted recovery from the Great Recession.”  He noted that “household debt substantially increased. Student loan debt alone tripled.”

“To improve their financial health, young adults need to increase their incomes, lower their debts, and have a plan to grow their assets,” he advises.  One way to expedite savings would be for public policy to “remove student debt obligations and support higher wages,” he adds.

He urged financial advisors to “focus on transparency and outcomes.  Explaining closely how a financial advisor is benefiting from the relationship, how they are being paid, and what they are able to accomplish in terms of specific goals would be important components of a healthy relationship between an advisor and client.”

Millennials “care about money. It’s much more than giving up their avocado toast,” Schaefer says. “They have a lot of financial awareness, but we need to have a stable income and pare down debt. This is a totally different generation.” 

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