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Go To The Head Of The Class By Serving Millennial Educators

With more than 6 million employees working in K-12 school districts across the country, educators and their families represent a material subset of the U.S. economy. Engaging with this vast market — especially with millennial educators who are beginning to establish long-term relationships with trusted advisors — represents a significant business-building opportunity for financial professionals.

Security Benefit has a longstanding history of connecting financial professionals with educators in the 403(b) marketplace. With this in mind, the Security Benefit Research Institute — the research arm of Security Benefit dedicated to exploring the effects of economic, behavioral and environmental influences on retirement security — commissioned research released in August 2018 to learn how millennial educators view retirement savings. 

The qualitative component of the research consisted of eight focus groups across four cities (Washington, Miami, San Francisco and Dallas). Millennial participants included those ages 21-37 who have at least shared financial decision-making responsibility in their household and who make at least $50,000 per year in income. In addition, Greenwald & Associates collected responses to a 57-question quantitative survey from 1,000 millennials, including 500 educators, from around the country. 

Here are some key findings from the research as well as ideas for financial professionals to engage millennials in retirement saving. 

Many Millennials Need Retirement Planning Help

It turns out that millennial educators are not that different than the rest of us, and they want many of the same things previous generations wanted from retirement. They imagine a long-term future that includes having a family with adult children, retiring from their primary career, traveling, volunteering and pursuing philanthropic endeavors. They hope to be financially secure, to move to a different area and engage in hobbies they enjoy. 

But many millennial educators are failing to take necessary steps today to reach that future, even though they rank saving for retirement among their top goals which include:

  • Building savings (56 percent)
  • Saving for retirement (54 percent) 
  • Paying off credit card debt (47 percent)
  • Paying off student loans (40 percent)
  • Buying a home (38 percent) 

Other obstacles to achieving long-term financial goals include the high cost of living, monthly bills and child care expenses. And 47 percent of millennial educators are paying a mortgage in addition to their other debts, while only 28 percent of non-teacher millennials are paying a mortgage.

Taking The Reins

The positive news is that most millennial educators are proactive about retirement savings. Only a third of them expect to fund their retirement with their pensions alone, with 68 percent of millennial educators planning to work at least part-time in retirement.

To bridge the savings gap, many millennial educators are saving through their employer-offered retirement plans. Seventy-six percent of all the millennials surveyed have access to employer retirement savings plans, and 80 percent contribute to them. Millennial educators significantly lead their non-educator peers in regard to pensions. Two-thirds (66 percent) of millennial teachers work for an employer that offers a pension plan (defined-benefit plan) and 82 percent participate in them. However, only 36 percent of non-teacher millennials have access to a pension and 54 percent participate, according to the Greenwald research.

This relatively high adoption rate by millennial educators may be closely correlated with greater access to various retirement options. According to the National Institute on Retirement Security, educators have greater access to employer-sponsored retirement plans than most of their non-educator peers. Millennials working in the public safety, finance, health care and education sectors have the best access to plans in the country, according to a 2018 NIRS report, “Millennials and Retirement: Already Falling Short.” 

Prioritizing Passion Throughout Life

Millennials are known for seeking professional paths based on passion, a theme that carries into their retirement. Many who plan to work part-time are planning to do so not because of financial need but to combat boredom. Many millennials prioritize experiences over possessions, so they emphasize activities and adventures as part of a compelling vision for retirement.

Millennial educators recognize their need for retirement planning help, especially when it comes to determining an appropriate asset allocation or the best investment vehicle. They tend to first research budgeting and investing strategies online. Although 73 percent said they are likely to work with a financial advisor in the future, only 41 percent currently work with one.  

How To Earn Their Trust

Millennial educators may be a great client segment for you to consider because of their motivation to save and their need for advice. However, they have unique preferences advisors should understand. Financial professionals who meet millennials on their own terms are likely to see greater success. Here are some guidelines for engaging millennial educators.

Build a personal relationship and connection. Avoid stereotypes in marketing materials. Instead, use relevant information that features more diverse types of people.

Although 80 percent of millennials would prefer to work with an advisor in person, 74 percent are at least somewhat interested in using an app for help with retirement savings. Even so, 77 percent of millennial educators would place most of their trust for financial advice with an advisor.

Be simple, realistic and honest. Offer consultations and low-cost trial periods so they can “dip” their toe in the financial planning waters. Be open and transparent about fees and your compensation.  

Provide information they can read at their leisure — ideally through apps. As noted, 74 percent of millennials are interested in using an app for help with retirement savings, but you can insert yourself into the process. Offer to help with goal-setting, more money management tips and debt repayment strategies.

Meet them on their terms and understand their needs. Explore options to visit educators at school during “in-service” week before students start school. Be aware that pensions vary from one school district to another — be sure to help your educator clients clearly understand their pension benefits.

Longer life expectancies, higher retiree-to-worker ratios, and lower interest rates have forced pension benefits lower for newer participants in many states. Keep in mind that supplemental savings programs are more important than ever in filling the gap and helping provide a secure retirement for teachers and other public employees.

Many of today’s public state pension plans have lowered benefits for newer participants, meaning financial professionals need to work closely with clients to map out creative strategies for achieving lifetime income. Financial professionals may want to bring annuities — and/or other investments and insurance solutions — to the table to help fill the gap.

Douglas Wolff is president of Security Benefit Life, overseeing product development, pricing and operations. He brings 25 years of experience in investments, financial consulting, actuarial pricing, product development, marketing and strategy formulation to his role. Contact him at [email protected] .


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