There are specific financial characteristics of millennials that every HR person should know. These factors have an enormous impact on the types of corporate benefits millennials seek. We’ll discuss this in our guide to working with millennials, specifically written for HR people who want to understand how to be successful with this cohort.
What is a millennial and why should you care?
First let’s start with the definition of what a millennial is.
A millennial is a person born between 1980 and the year 2000. This means millennials are between 22 and 42 years of age, as of 2022.
(in a nutshell)
Did you know, as stated in a recent webinar by Broadridge Fi360 Solutions and Federated Hermes, that:
- With 92 million members, they are the largest and most diverse generation in history.
- 62 million of millennials are either working while having families or about to start them
- 39% of them have a Bachelors degree, making them the most educated generation, and well over half of Associate’s, Bachelor’s, Master’s, and Doctoral degrees are held by women
- The wage gap between women and men is less pronounced in this generation. Though increasingly in command of important financial decisions regarding areas such as about financial planning, charitable giving, and day to day banking, women are less sure of themselves about investing when compared to men.
- They check their smartphones 43 times a day, on average
Why should an HR person care? Because when you look at their characteristics, all of it is screaming: educate me about my corporate financial benefits.
Educating your millennial employees
This is a technology-savvy, skeptical, independently-thinking group. They’re not that open to being dictated to. Instead, millennials prefer to be given guidance and being listened to.
HR professionals who want to work effectively with millennials should adopt an approach that is:
Outreach can occur through Lunch-and-learns, courses, workshops, seminars, and email campaigns. If you are looking for a cost-effective way to educate your millennial workforce, consider a financial seminar through SOFA.
Millennials and money
As an HR person, you’ll be at the helm guiding your millennial employees through their financial benefits.
What are the key points to be aware of?
#1 They’ve got the financial future on their minds
Millennials as a generation that were born into a world without pension plans, and the prospect of receiving Social Security is becoming dimmer and dimmer by the minute.
- According to a study by Charles Schwab, 70% of women surveyed called their savings their primary concern while less than half as many (30% of women) cited their health.
- According to the Transamerica Center for Retirement studies, 30% of millennials are contributing 10% or more of their paycheck to either a 401(k) or other type of savings plan.
It’s clear that personal finance, and especially retirement, is of high interest to many millennials. What are you going to do when they turn to you for guidance?
To be successful, an HR person should…
- Provide ample opportunities for millennials to access online resources (webinars, blogs, courses) that will provide them with guidance they need to save as they wish. Posting to social media on financial topics would be a good idea, for example.
- Be knowledgeable about the workplace savings vehicles offered (401k, 403b, ESOP, etc.) as they are often a source of confusion for those unfamiliar.
- Be open to questions and make yourself freely available. Remember that for many employees, you are their #1 resource. Many won’t look beyond their company, an institution they may trust more than their bank, insurance company, or even financial advisor.
- Taxes are a major impediment to saving. Know the difference between tax-deferred vs. tax free options, the basics of tax planning, how changes in the tax code may impact workers of certain income levels, etc. (Are you sleeping yet, by the way?)
- As life expectancy for women is longer than men, know about what long term financial resources they may need. What if they ask you if they should roll over their 401(k) from an old company? Are their pension options integrated with social security? Know the answers.
#2 They’re skeptical
Millennials were born of the 2008 market crash/mortgage crisis, and tend to adopt a far more skittish attitude towards institutions than other cohorts.
To be successful, an HR person should…
- Ask great questions. When trying to gain the trust of a skeptical person, you are only as good as the questions you ask. Try to be reflective. “So if you were to find out you were getting a 30% bigger bonus this year than you thought, how would that change your outlook about saving?”
- Understand how fees work in a 401k plan. If they are going to be charged an administrative fee, know it. Know what the expense ratios are for the investment fund options, what it means, and be able to explain it.
- Hold back on the “corporate-isms”. The worst thing you could do would be to make any indication that you care more about what your company or any other institution’s agenda are than theirs.
#3 Values matter
Millennials don’t just take things at face value. They are keenly interested in ways to a achieve goal while doing good in the process.
To be successful, an HR person should…
- Show values and relate to them on a human level. Find out what they care about. Be curious about where their views on things came from. “So I see you care about animal rights. Is there a story behind that?”
- Pursue environmentally-friendly office practices. Include paperless options, support waste reduction and recycling, and adopt use of eco-sensitive materials wherever possible.
- Be familiar with sustainable investing/ESG options which are becoming increasing popular within 401k plans.
Ready to succeed with millennials?
Your actions have a huge influence over the financial wellbeing of all the people who work at your company. It’s critically important that you understand all the rules and how vehicles such as 401ks, 403bs, and defined contribution plans work – but it’s more than even that. You owe it to them to know about every possible aspect of the financial vehicles you are offering them – from 401ks to cash flow, asset allocation, market volatility, and on and on.
We are pleased to announce our 2022 SOFA workshops for HR professionals for SHRM CE credits. The Society for Financial Awareness is a 501(c)(3) non profit public benefit corporation whose mission is to provide financial education across America.
2022 SOFA WORKSHOPS
The learning outcomes of each of the workshops are outlined below.
Social Security Explained
- Type of benefits you are eligible to receive
- Difference between full retirement age and delayed retirement
- Retirement benefit filing strategies
- Annuity types and distinctions
Retirement Income Planning
- Establishing retirement goals
- Estimating retirement income and reliability of sources
- Tax-advantaged savings vehicles versus tax free
- Provisional Income and Investment considerations
Tax Efficiency in Retirement
- Looking at your distribution options from a company retirement plan
- Understanding the impact of erosion through
- Turning retirement assets into income streams
- Pre-tax versus Post tax, things to consider
- What is it and why is it becoming even more important?
- Medicare Open Enrollment
- Part D Prescription Drug Coverage
- Enrollment basics
The following 2022 SOFA workshops for HR professionals and their employee are offered over Zoom. There is no cost. You will be eligible for CE credits by completing any of these workshops.
- Tax Efficiency in Retirement, Wednesday, January 5th at 12 PM ET
- Medicare, Wednesday, January 12th at 12 PM ET
- Social Security Explained, Wednesday, January 19th at 12 PM ET
- Retirement Income Planning, Wednesday, January 26th at 12 PM ET
- Tax Efficiency in Retirement, Wednesday, February 2nd at 12 PM ET
- Medicare, Wednesday, February 9th at 12 PM ET
- Social Security Explained, Wednesday, February 16th at 12 PM ET
- Retirement Income Planning, Wednesday, February 23rd at 12 PM ET
- Tax Efficiency in Retirement, Wednesday, March 2nd at 12 PM ET
- Medicare, Wednesday, March 9th at 12 PM ET
- Social Security Explained, Wednesday, March 16th at 12 PM ET
- Retirement Income Planning, Wednesday, March 23rd at 12 PM ET
Chiavarone, Steven A., CFA. (2020 December). Broadridge Fi360 Solutions and Federated Advisory Services Company. The ascendency of millennials and how the future of finance is female. Continuing education workshop, November 2021.
Transamerica Center for Retirement Studies, 2016
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.