Wary of traditional advisers, young adults have a host of alternatives to choose from
Hence the arrival of new and unconventional approaches that try to help 20- and 30-somethings start saving and investing. These range from largely free or inexpensive services offered by financial-services providers—including those the hipsters have tended to shun—to podcasts and blog posts hosted and written by financially savvy young people working hard to win over a generation of skeptics.
Twentysomethings are “still going somewhere for the information,” says Stefanie O’Connell, 29, whose blog posts about personal finance from her perspective as a young actress getting by in New York led her to a book-publishing deal earlier this year. Ms. O’Connell has blogged for Northwestern Mutual, Barclaycard and hosted a “Millennials & Money Trivia Night” for Capital One.
Northwestern Mutual has a personal-finance site, the Mint Grad, geared toward college students and recent college graduates. The site features young-adult bloggers who have experience managing their student loans or climbing out of credit-card debt. They come across as more authentic and less preachy than older advisers, says Emily Holbrook, director of the young personal market at Northwestern Mutual.
“That peer-to-peer contact, and content, is really important,” says Ms. Holbrook. “It really gives a ton of credibility.” Such posts can help get young adults in Northwestern Mutual’s door, she says, and potentially drum up clients for life insurance, a core product, by focusing on how it can benefit them today instead of just 50 years down the line.
MassMutual Financial Group has created a social club of sorts it calls Society of Grownups, which has its own physical space in the Boston area with light-wood furniture and an open-air feel that’s more like a friend’s loft than a bank. Twenty- and 30-somethings can choose from a variety of classes and programs offered at the site. These include dinners at which financial planners lead discussions on topics like similarities between a fine wine and a good investment, networking events and one-on-one meetings with certified financial planners.
The company uses a combination of word-of-mouth, social media and advertising, including on local subways, to draw young people in. Typically, classes draw at least six students and are capped at 12. Classes that cover less-complicated subjects, tips about travel, for instance, cost about $10. On average, six to eight events are hosted each week, with prices that vary depending on the level of information. Networking events, which tend to draw 20 to 30 people, are typically free. Events that include in-depth advice from a financial planner, as well as food and wine, cost about $40.
Karen Carr, a 27-year-old certified financial planner with Society of Grownups, hosts some of the larger events and meets with clients who sign up for individual sessions. The question she hears most: “Am I going to be paying student loans until the day I die?’ ” One-on-one sessions cost $20 for 20 minutes and $100 for 90 minutes. Planners aren’t allowed to sell products, says Nondini Naqui, CEO of Society of Grownups.
Some of the millennials Ms. Carr helps are saving money, she says, but tend to have goals that are somewhat immediate and lifestyle-oriented, such as finding the money to travel. “It’s not all about your accumulation of wealth,” she adds.
The ability to weave financial advice into issues young people commonly face is part of what gives Erin Lowry’s blog, Broke Millennial, its currency. Her blog has been featured by CBS Sunday Morning, USA Today, Yahoo!, Reuters and others.
Relationships and emotions are frequent fare. She framed one of her posts as a love letter from the stock market to millennials to convince them to take a little risk, she says. Another, titled, “Getting financially naked with your partner,” focused on how she and her boyfriend broached the subject of his student debt, with an eye toward how that debt could effect their plans as a couple.
“I like to trick people into learning about money,” says Ms. Lowry, who has a second job writing and editing blog posts for Magnify Money, a financial-comparison site. She also has written posts for credit-reporting company Experian and tax-preparer H&R Block.
Farnoosh Torabi, 35, host of the “So Money” podcast series, keeps her personal-finance message free of nitty-gritty investment strategies. Instead, she interviews experts and celebrities, like fashion personality Tim Gunn, about how they approach financial health. She says millennials appreciate advice that’s more than just quick tips or calculations they could look up on Google. Aspirational 20- and 30-somethings are looking for ways to sort through their emotions surrounding money, Ms. Torabi says. Hearing candid stories from guests about how they worked through some of their biggest money problems helps empower her listeners to make their own money decisions.
“It’s not really about the numbers on the show, it’s about the behaviors,” says Ms. Torabi. Her podcast, launched in January, is on track to surpass 1.5 million downloads by the end of the year.
Among apps offering financial advice, Stash-it is about saving money, and geared toward young women. Users set saving goals and deadlines, then the app calculates how much they need to save each week to reach those milestones. The app peppers its users with tips like limiting ATM withdrawals to once a week to practice budgeting.
The app’s creator, 35-year-old Helen Bui, says she received her own wake-up call about money as a 20-something working in New York City when, despite her drive and full-time employment, she found herself living paycheck to paycheck. She realized that things like multiple sushi dinners each week were luxuries she couldn’t afford and that she had to make trade-offs. She says that Stash-it was launched in the Apple Inc. app store on Oct. 20 and that so far downloads are growing by 50% per week.
Digit, a robo-savings tool, also nudges users, who are 27 on average, to think more about saving. The company’s 30-year-old CEO, Ethan Bloch, says the inspiration for the service, which links to users’ bank accounts and periodically stashes away small sums for them, came in part from watching his friends work very hard at decent-paying jobs but still struggle to get out from under student-loan or credit-card debt.
When users reach savings goals they receive congratulatory text messages featuring celebrity pictures and comments like “It’s raining savings.”
Says Mr. Bloch, “We’re activating a customer segment that doesn’t really get spoken to well by traditional banks.”
Ms. Berman is a reporter for MarketWatch in New York. Email her at firstname.lastname@example.org