Business Tech

Millennial Generation Tech- Savvy and Smart

After witnessing multiple economic tsunami’s in Corporate America, the millennial generation seems more apprehensive today than ever before about the stock market. In fact, they will benefit from the largest inheritance any American generation has ever received after the economic dust settles. Yet, millennials –who are the nation’s biggest generation ever— still remain skittish about investing, with many admitting that they fear the market.

Older millennials born in the early 1980s have lived through three major market crashes in their lifetimes: 1987, 2001, and 2008. Younger millennials, meanwhile, watched the 2008 financial crisis and resulting market chaos in real-time, and many likely saw their parents foreclose on homes, lose a job, or postpone retirement. A recent Capital One Share Builder study captured the results of this troubled financial upbringing in stark numbers, an overwhelming 93 percent of millennials responded that they either distrust or know nothing about the stock market, both of which were cited by respondents as reasons for not investing.

Still, many market watchers are bullish on the millennials, who are set to inherit more money than any previous generation. Additionally, the millennials quickly adapt to new technologies and rapidly become savvy when pushed.

But tech-savvy or not, millennials might want to reconsider letting an app manage their financial future.

“I don’t know that financial planning … should be considered a game, although Monopoly has been around for many years,” Jim McCarthy (CFP®, ChFC®), founder of Directional Wealth Management, LLC, a fee-based wealth management and financial planning firm based in Rockaway, New Jersey.

Millennials might be playing games with their money regardless of what the professionals think. A Wells Fargo study found that only 16 percent of millennials work with a wealth manager, and robo-advisors, meanwhile, held $5 billion in assets as of 2014, a number that has surely swelled by now. But is it wise to trust software to handle your finances?

“Basically, they’re a highly efficient assembly line approach to investing, and I’m not sure that’s the best thing,” McCarthy said.

Directional Wealth Management, LLC, takes a “real educational approach” to working with clients who want to improve their financial situation. There’s no firm minimum to invest, and McCarthy noted that Directional Wealth structures their fees based on the clients’ income and net worth. McCarthy said his goal is to guide clients by helping them define their goals and how to work toward them.

To help clients get there, Directional Wealth Management uses the “FORM” model, which stands for family, occupation, recreation, and money.

“We need to understand what’s really important in the client’s life … Money is just a tool that helps them live life abundantly,” McCarthy said. The firm uses an integrated process of educational resources, collaborative tools, and one-on-one advice to move clients through the FORM process and on their way to achieving their financial goals. The result is a “written roadmap” that McCarthy said helps clients understand their financial plan without being hassled with difficult-to-understand jargon.

The need for simplicity is part of what pushed McCarthy into wealth advising. His father died when he was young, leaving his mother alone to manage family finances.
“My mom struggled with the finances at that time, and that’s what lead me to a career in finance,” he said.

McCarthy began his financial services working in a “more traditional” Wall Street environment. He left that world in 2010 to start Directional Wealth Management, LLC, and has built up his client-base to 105 families – a number he intends to grow in 2017.

McCarthy described founding his own firm as giving him the freedom to serve clients the way he believes is in their best interest. The 2008 financial crisis left many of McCarthy’s clients reeling; he worked to salvage his clients’ financial plans, but corporate insistence on constant growth – as opposed to focusing on protecting existing clients – restricted his options.

“Most of my clients came through that and recovered fully, in excess of fully, but I felt that I didn’t do as good of a job as I could have given the pressure I was under … working in a corporate environment,” he said. 

Directional Wealth Management, LLC, operates as a fiduciary, meaning that the firm puts clients’ interests first. As an independent firm, McCarthy has the freedom to make decisions aimed at improving his clients’ financial position without any red-tape. McCarthy said it also means that he discusses fees upfront with clients and provides the highest level of transparency.

And while the younger crowd might be more accepting of automated solutions, a real advisor with the investors’ best interest at heart remains vital.

“Every client is unique. I deal with more than 100 families and, while there are some similarities, we treat every client uniquely,” McCarthy said. 

That’s something robo-advisors can’t do yet. The automated advisor might be able to slice and dice investments according to an optimal asset allocation formula, but it can’t take account of the nuances between clients.

“Robo-advisors might be lower in cost, but can’t develop personalized long-term solutions for clients,” McCarthy said. “Automation is great for making a billion widgets or a billion hubcaps, but not for managing tens of thousands of peoples’ financial situations.”

“As the father of 3 millennials, I can appreciate the appeal of robo-advisor solutions but to get a financial plan for a lifetime you need to work with a personal advisor”

For more information see

Directional Wealth Management, LLC and Securities America are separate entities. They are independently owned and operated. Securities offered through Securities America, Inc.,  Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc.

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