What image comes to mind when you think of wealth management? Charles Dickens’ character Ebenezer Scrooge? Or, maybe it’s Mr. Potter in the 1946 film It’s A Wonderful Life? Well, if you imagine stuffy old bankers in three-piece suits, then your vision is as outdated as those notorious villains.
Nothing could be further from the truth at Greenleaf Trust. In May 2015, the company was named by the Center for Generational Kinetics as one of the best places to work for millennial employees in America. The list, which comes on the heels of news that Millennials are now the largest workforce in America, is the first of its kind to identify companies that excel at recruiting, developing and retaining top millennial performers.
Andrew Riker, a Greenleaf Trust Wealth Management Advisor, says that Millennials are financially fit, too. “I think Millennials are pretty good savers. Millennials prefer to live within their means. They live within their means and delay some gratification. Millennials are on top of things better than past generations.”
He continues, “Baby Boomers’ parents saved because they lived through the Great Depression. Boomers didn’t live through that, so they were spenders. But consider this: Millennials understand the 2008 recession because they saw what happened to their parents. It’s made them more cautious.”
“2008 served as a financial wake-up call for many Americans. We don’t like to wait for things that we want—we want them now. Anytime there’s been a huge crash in the market there’s been a lot of debt built up, whether it be household debt, related to housing, or leverage on the stock market. People start de-leveraging after market crashes and pay down debt. As the market and economy have recovered, we’ve seen a little bit of an increase in debt in more recent years, and debt’s not necessarily bad. It’s good; it helps the economy. It becomes a problem when people get to a point where they have too much debt, and they can’t control it.”
So what’s the average consumer to do? Riker recommends a well thought-out financial plan—which many people do not have.
“We take a holistic approach to wealth management and look at the complete personal financial planning spectrum, and that includes insurance planning. We typically recommend an umbrella liability policy for clients because they have wealth that needs to be protected. It’s important to have your assets covered should something happen and you’re sued.”
Riker also recommends term life insurance, especially to younger clients, since it’s relatively inexpensive for younger people who may be thinking about having a family. But it’s also important for older clients or anyone who is going to leave a financial burden when they pass on.
A big part of financial wellness is making—and sticking to—a budget. “You need to be aware of your income and your outflows and develop a plan, and make savings and financial goals part of that plan,” Riker recommends.
“We’re constantly talking about goals when we’re talking with clients, so we’re asking questions like, ‘What do you want your wealth to do for you? How do you envision retirement? Do you want to pass on wealth to your heirs? Do you have any charitable desires, causes that you’d like to leave money to now or in the future at your passing?’ The goal aspect of planning is very important.”
Tax planning and estate planning are two other pieces of the pie. Greenleaf Trust does not complete tax returns for clients but instead help clients save a lot of money by recommending certain tactics and strategies.
“An estate plan isn’t only necessarily for wealthy people—it’s for people who have assets that they want to pass on, and they want to avoid probate court. It can be as simple as having a will. Other documents we recommend are the designation of a patient advocate, and power of attorney.”
Riker also recommends that everyone, Baby Boomers, Generation Xers and especially Millennials, max out their 401K to the extent that they’re getting an employer match.” Millennials, too, should consider if there’s a Roth 401k option within the plan and saving money there. They pay tax on those dollars now but, in the future when they take that money out, it won’t be taxed. It’s better to get growth on those dollars that won’t be taxed in the future. That’s a huge advantage. And if we don’t know where the tax rates will be, which we don’t, it could be a nice retirement income.”
And, Riker adds, it’s never too late to start a financial plan. “I think the first step is being aware of where you are: looking at your assets, looking at your liabilities, putting together a budget, and talking through the goals you have. Maybe those goals aren’t realistic, but you can revise your goals based on the information that you uncover.”
About Greenleaf Trust
With offices in Kalamazoo, Birmingham, Traverse City and Petoskey, Greenleaf Trust is an independent Michigan-chartered trust-only bank, exclusively focused on wealth management, trust and estate administration, and administration of company-sponsored retirement plans.