Financial Planning: Understanding Millennials and Boomers

Millennial investors face an uphill battle both in acquiring assets and finding the right advisor to guide them. And the financial services industry muddies the waters further with subpar products and self-declared advisors looking to score quick commissions – often to the investor’s detriment.

A pair of millennial advisors thinks there is a better way.

“Far too often, our business has been overwhelmed by people who are just insurance salesmen. They actually don’t do financial planning, call themselves financial advisors, and just are looking to make a sale and then be done with the client,” said Taylor Ripka, CFP®, AWMA, president and financial planner at Delta Capital Advisor. “A sale of an insurance product can hurt the client more in the long-term, than just using what the client has and then maybe asking for advice on online platforms of what their allocation should be. Are there risks that they have in there as well? Yes, but in my opinion as an advisor those risks are easier to overcome.”

Delta Capital Advisors, based in Maple Grove, Minnesota, provides comprehensive financial planning, investment management, estate planning, and more to a wide variety of clients. The firm does not require a minimum asset level to sign on as a client, Ripka said, adding that Delta Capital Advisors strives to help a diverse set of investors but does focus on those nearing retirement.

Ripka also works closely with financial advisor Luke D. DeBoer, CFP®, president of The Financial Planning Co., another firm in the Maple Grove area who also serves a wide variety of investors with comprehensive financial planning and other services including investing, insurance, and employee benefits consulting. DeBoer tends to focus on younger clients rather than retirees or investors getting close to retirement.

The two firms work together to better assist investors, with each sending clients to the other as needed, Ripka said.

“We have a great collaboration together. Historically when we’ve had some clients in the older phases of their life, DeBoer will ask for my input and how to develop a plan differently and what we’re looking at, and it’s the same thing if I have a younger client,” Ripka told “Advisors Magazine” during a recent interview. “We’re not referring the client to each other, there’s no compensation going from one to the other, but it’s just purely a recommendation for what’s in the best interest of the client and what best serves the client. It’s been great to be able to do that and to have that kind of practice.”

ripka quoteInvestors, especially younger professionals who recently began accumulating assets, need a clear definition of success. Many advisors still hew to outdated asset allocations and cookie-cutter approaches that no longer best serve clients. Investors need to find an advisor who puts their best interests first and who will consider their full financial picture while developing a customized approach.

“Clients need to ask their advisors what the real goal is and how they define success,” Ripka said. “Returns are important, but there are only so many things you can control regarding returns within the market.”

Millennial investors have it especially rough and need to be particularly careful. A new study from the Stanford Center on Poverty and Inequality described millennials as “canaries in the coalmine” for a variety of “toxic economic trends,” and noted that the generation suffers from lower incomes, savings, and higher rates of suicide than previous generations. Many millennials also graduated into the Great Recession, kicked off by the 2008 financial crisis, and their incomes never recovered – leaving them with fewer assets to get started with as investors.

“Millennials are the first generation to experience in a full-throttled way the social and economic problems of our time,” said David Grusky, professor of sociology and director of the Stanford Center on Poverty and Inequality in a news release on the study results.

As millennials tried to enter the job market during the Great Recession of the late 2000s, they also had to deal with decades-long economic issues, such as rising inequality and declining economic mobility. This made it an especially difficult period, he added.

“We can think of them as canaries in the coalmine who reveal just how toxic those problems are,” Grusky said in the release.

Ripka and DeBoer, both millennials themselves, see the generation’s problems through a personal lens.

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“Being a financial advisor who graduated not only during the Great Recession but almost exactly at the worst of it, May, 2008, I'm very cognizant of risk as a result of becoming a working adult during this time,” DeBoer said. “I'm constantly thinking through what the decisions will be if such-and-such happens. Always trying to play out the future scenarios in my mind. I believe my mindset would be quite different if I cut my teeth professionally during the boom years.”

Millennials often find themselves targeted by breathless media headlines that write off the entire generation as entitled, demanding, and financially foolish. The reality, however, shows that the generation has been battered by a unique set of economic conditions that go beyond the 2008 financial crisis and also include a wider income gap between high school and university educated workers and the attendant loan debt that comes from needing to hold a college degree.

"If you understand the economic and social context within which millennials are growing up it’s natural to feel real empathy and hard, by contrast, to understand the anger that’s often directed toward them,” Stanford’s Grusky said in a news release.

All clients require a focused, tailored approach that takes their financial goals into consideration. A customized solution may be even more important for millennial investors, however, as the data shows they hold fewer assets and are less likely to own a home than members of previous generations. Ripka and DeBoer work with clients of all stripes to develop clear expectations and goals so that investors can make their money work for them. That means the emphasis is on the investor to understand what they want in life, not just in their bank account.

debior quote“My approach has far less to do with products or savings levels or anything tactical and has much more to do with talking through expectations,” DeBoer said. “We as humans have this amazing ability to be happy with our circumstances as long as they are either at or beyond what our expectations were, and unfortunately the inverse is also true. As such, ensuring my clients are setting the proper expectations around retirement income, longevity, and even the possible impact of long-term care is vitally important.”

Long-term care is an issue for investors across the age spectrum. Lifespans continue to increase and long-term care costs have risen to the point where they are no longer affordable for many. Ripka and DeBoer, despite their different client-bases, both highlight to clients the need for long-term care protection and longevity considerations.

“A lot of them have the mentality of, ‘Hey I’m going to be gone by my early 80s because that’s what my parents did.’ We’re looking at it and saying, ‘Hey, we need to go longer for you,’” Ripka said.

Universal issues like long-term care might apply to all clients, but how those tools fit into an investor’s portfolio make up the customized solutions offered by Ripka and DeBoer. Even clients with a large number of surface-level similarities need a tailored solution, and that requires an advisor to dig deep and truly understand them.

“I have clients where I have multiple family members but every family member has to have a different financial plan because of how they operate and what their goals are,” Ripka said.
For DeBoer, working with clients means understanding their needs, goals, and communication style.

“I try my best to get an understanding of how prospective clients want to interact,” DeBoer said. “I typically ask my clients to categorize themselves into a type, using a watch and time analogy. When asking what time it is, do you want to simply know what time it is? Or do you want to know what time it is and how the watch works?"

Developing that sort of strong, trusting relationship between client and advisor helps create the conditions for success. It is also why many investors refer family members, Ripka said. And these multigenerational clients benefit from their advisor’s deep knowledge of their family situation, he added.

“It’s such an important thing … I love when I work with three generations of clients,” Ripka said.

For more information about Delta Capital Advisors, visit: deltacapitaladvisor.com
For more information about The Financial Planning Co., visit: thefinancialplanningco.com

Registered Representative of and securities offered through Berthel Fisher & Company Financial Services. Inc. (BFCFS). Member FINRA/SIPC. Investment Advisory services offered through BFC Planning Inc. Delta Capital Advisors, BFCFS, and BFC Planning Inc. are independent entities. Luke DeBoer and The Financial Planning Co. are not affiliated with Delta Capital Advisors, BFCFS, or BFC Planning Inc.


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