A new TIAA-CREF survey finds Gen Y relies predominately on personal networks for financial advice, with adults ages 18 to 34 being more likely than the general population to involve their parents (47% vs. 19%), extended family (22% vs. 14%) and other trusted adults (31% vs. 21%) in their search for advice. Thirty-seven percent also involve a spouse or partner to help with their finances.
TIAA-CREF’s annual Gen Y Advice Matters Survey shows Gen Yers are actively planning for their financial future. Of those who sought out advice, many expressed an interest in creating and managing a formal budget (72%), saving for education (65%), or managing their outstanding student loans (53%).
When it comes to financial advice, TIAA-CREF says it’s not just the topics but also the delivery method that matters to Gen Y. The majority (55%) of Gen Y said their first choice for receiving financial advice is face-to-face, though that number dropped from 65% in 2012 as more Gen Yers selected online advice as their first choice. Seventy-nine percent of those surveyed say it would be helpful to have advice that’s customized for their age group, and they are more likely to say they value online tools and calculators than the general population (74% vs. 57%). Gen Yers are also more likely to value seminars (68% vs. 53%) and webinars (67% vs. 54%) as channels for professional financial advice.
“Gen Y gives new meaning to the term connected,” explains Kathie Andrade, executive vice president and head of individual advisory services at TIAA-CREF. “It’s important for them to access financial advice via multiple platforms. While this may present a challenge for financial advisers, plan sponsors and employers, it also offers multiple opportunities for them to engage with Gen Y and speak their language when it comes to financial topics.”
According to Andrade, the survey also found individuals who seek advice are invested in their financial well-being and tend to make positive changes after getting professional guidance. Gen Yers, for example, are 12 percentage points more likely to monitor their spending frequently compared to the general population (75% vs. 63%). They are also 14 percentage points more likely to change their spending habits (76% vs. 62%) and increase their monthly savings (70% vs. 56%) after getting professional advice.
As Gen Yers look to their parents for help, they may be learning from their parents’ experiences and trying to find financial stability earlier in life. Only 57% of those ages 55 to 64 said they feel optimistic about their finances, and many said they are encouraging their children to take more aggressive action on saving and investing than they did.
“Gen Yers understand how to leverage financial advice to their advantage,” Andrade adds. “They make concrete changes to their financial well-being early on that can help them prepare for the future and think ahead to retirement.”
TIAA-CREF says Gen Yers who have received professional financial advice continue to rely on their personal network on an ongoing basis, which demonstrates that they value personal relationships in dealing with financial issues. The findings revealed that 70% consistently turn to their family and friends, 45% look to their employer, and 17% turn to social media on a regular basis. More than half (51%) of the survey respondents also take advantage of financial service provider websites or other online tools.
TIAA-CREF has developed a website geared toward the needs of young professionals, called Starting Your Financial Life. The Advice Matter survey was conducted by an independent research firm and polled a random sample of 1,000 adults nationwide to assess their attitudes, preferences and behaviors about receiving financial advice. An executive summary of the survey is available here.