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6 Ways Financial Planning for Young Clients Is Different Thumbnail

6 Ways Financial Planning for Young Clients Is Different


Today's generation has different financial needs than older generations.

Millennials and younger want instant answers, flexibility, and plans to live a different future than other generations.

That's why financial planning for young clients looks much different, and connecting with financial professionals that meet those needs is vital.

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What Is Financial Planning for Young Clients?

As the name suggests, personal financial planning is a plan for your financial future.

It considers your financial goals, life stages, potential costs, and savings ability to help you reach them. Financial planning isn't asset management, but it's also not a narrow definition that fits a specific mold.

Financial planners may offer investment and estate planning, retirement planning, tax planning, and even budgeting services. The services offered vary by professional and the demographic they serve.

How Financial Planning Differs Between Generations

Financial planning services greatly differ between generations because each generation has unique challenges and needs. Financial planners that can adjust to the latest generation's needs will have the best chance at succeeding.

Millennials and Gen Z are just starting their financial journeys, and older millennials may be advancing to the next phase in their careers. This gives them more money to work with when reaching financial goals.

The younger clients have issues such as low income and high expenses, whereas Baby Boomers and Gen Xers are older, have more assets, and have more stability.

There's also the consideration of the $30 trillion in wealth that will begin trickling down from Baby Boomers to Generation X to millennials.

All generations need financial guidance no matter where they are in their journey, but knowing how to make a personal financial plan that caters to young adults and older clients is important.

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What Is Cash Flow Planning?

The main difference between financial planning services for younger clients and older generations is the focus on cash flow versus assets.

Baby Boomers and other older individuals focus mostly on managing their assets. They've mastered their cash flow and taken care of liabilities; their primary goal is to have enough money through retirement.

Younger clients, on the other hand, must focus on income, expenses, and finding balance to have the sizeable assets their predecessors have.

Young adults still have all the phases to go through. This includes getting their first job, moving out independently, buying their first home, having kids, and raising them.

Cash flow planning includes managing income and debt and planning for future success, including the following.

  • Habits - Managing financial habits, creating budgets, setting aside emergency funds, deciding whether to buy or rent a home, and shifting income from dual to single-income households are all part of cash flow planning.
  • Debt management - Getting out of student loan debt, credit card debt, business loans, and any other consumer debt will help increase your cash flow.
  • Credit - Building a solid credit history is a big part of cash flow planning that often gets overlooked. Proving that you're financially responsible, pay your bills, and can fix credit problems is the key to making cash flow planning work.

What Is Income Planning?

Income planning controls what a household can do regarding cash flow planning. You can't plan cash flow if you don't have income. In the income planning stages, you must include the following:

  • Career/income - Consider career changes, returning to school, negotiating raises, and climbing the ladder. You may also consider opening your own business or becoming a consultant, either full-time or on the side, for additional income.
  • Benefits - Carefully considering and maximizing employee benefits is important and includes 401K, HSAs, group life insurance, and stock options. Be sure to evaluate the tax consequences of each benefit when fitting them into your financial plan.
  • Career shift - Changing careers is often a part of the income planning process because it may include expenses, such as going back to school, and budget changes as your income increases.


A big part of cash flow and income planning is housing considerations.

This includes buying vs. renting, the cost of living, taxes, insurance, and expenses incurred when moving, especially across state lines.

Financial Planning Values for Younger Clients

The younger generation has different financial priorities than older generations, and financial planners must adjust accordingly.

Whereas existing (older) clients may want to sit and talk in person for long periods and discuss all aspects of financial planning, the next generation wants to cut to the chase much faster.

  1. Verbiage - Young adults want to know the facts, and that's it. They don't want small talk or to hear a lot of financial jargon they don't understand.
  2. Virtual services - Gen Z was introduced to electronics from a young age, and now they expect all services to be virtual and on-demand versus making an in-person appointment.
  3. Beyond retirement savings - A financial advisor must be willing to talk about issues other than retirement to attract younger clients. Young adults want to save for retirement but have more immediate needs like caring for previous generations or paying education costs for their children.
  4. Financial coaching - Younger generations don't want just the facts about asset management. Instead, they want holistic financial services that cover all aspects of their financial lives, from budgeting to retirement.
  5. Alternative pay structure - Pay structures today aren't necessarily straight salaries. Creating a financial plan for young adults means considering different pay structures, including performance-based pay and commission. 
  6. Relationship-building - New clients want to be able to connect with their financial advisors and know that they get the big picture for even the youngest members of society.

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Financial Planning Essentials for Young Clients

Young clients have many different priorities than your more established clients. From age 20 to 40, young people experience intense life milestones that change their financial needs dramatically.

Education Costs

Paying for college is the first large expense most young adults have, and many end up with student loan debt.

Knowing how to plan to pay for college and eliminate student loan debt is one of young adults' first financial needs when they find a financial planner.

Housing Costs

Housing costs have risen significantly in recent years.

Most millennials and younger generations don't have the savings accounts older generations once had. This means housing costs will be even higher, or they'll be stuck renting.

Planning to save for a sizeable down payment like Baby Boomers had without an existing home to sell is a crucial part of any money plan.


Financial planning strategies get even more in-depth when considering marriage. Young adults who have just mastered handling their finances must now consider another person's financial life and habits.

Marriage can create more expenses and financial needs that financial advisors must address.

Children/Family Planning

Planning for a family is at the top of the finance plans young adults need, especially newlyweds.

Anyone considering starting a family must start saving now to ensure they have the money needed to handle the high cost of raising kids, which averages $288,094 currently.

Business Costs

Previous generations never considered starting a business or business costs in the steps to financial planning, but today it's crucial.

Having money to start your own business or even a side hustle to increase your income streams is the key to a comprehensive financial plan.

Retirement Savings

Retirement planning looks different for today's generation.

Rather than retiring at the average age of 65, many young adults set goals to retire at 30 or 40, which means they need much more money for retirement.

Aging Parent Care

Boomers and other generations want to age in place, which means they need aging parent care that they may or may not have included in their basic financial planning.

If the care falls on the younger generation, they need help to create a financial plan that meets all their goals.

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Financial Planning Process for Younger Generations

The financial planning process for younger generations looks much different than for older generations. Today's planning is more flexible, instantaneous, and fluid.

It allows for many changes, including more income streams, early retirement, and paying college and aging parent expenses simultaneously.

Connecting With Younger Generations

Connecting with younger generations is an area that many financial advisors struggle with.

The Internet and social media are key players in connecting with young adults facing financial challenges or wanting to create financial plans to succeed.

Focusing on financial independence, student debt, fewer assets, and new life stages will help financial advisors reach the right audience.

Financial Planning Basics FAQs

Do I Need a Financial Plan?

Everyone should have a financial plan, whether they are well-off or still making lower wages and trying to work their way up the ladder.

The right financial planning steps will help young people learn what they need, work toward it, and achieve their goals.

What Is the Purpose of a Financial Plan?

A financial plan helps you know where you stand today and in the future. It provides tips to help you make important financial decisions and shows how each decision can impact your future money goals.

What Should Be Included in a Financial Plan To Protect Assets?

There are many ways to protect your assets, including an estate plan, life insurance, and tax planning. Not forecasting tax liabilities or how to protect your estate from legal issues could leave your assets vulnerable.

What Is the Best Financial Planning Advice for Young Clients?

The best financial planning tips anyone can give young clients have to do with starting early.

You are never too young to save for financial goals, including retirement. No matter how far off your retirement is, starting now leaves more time for compounded earnings.

The Bottom Line

Everyone needs a financial planner, but financial planning for young clients is very different. It's more than managing assets and talking about retirement.

Today it's all about budgeting, creating a good credit history, getting out of student debt, and planning for the long term.

The new generations want to focus on life. They want to prioritize raising a family, caring for aging parents, and retiring early.