Financial planning for millennials requires a new kind of advisor

Shannon Lee Simmons, Founder of The New School of Finance, on how to talk to twentysomethings about investing

New School of Finance founder Shannon Lee Simmons

New School of Finance founder Shannon Lee Simmons. (Portrait by Erik Putz)

In a mad dash to attain the trappings of a successful adult life, a certain segment of millennials—defined as young adults in their 20s and early 30s—is overextending itself. They dive in headfirst to get the car and the house while still carrying student loans. To their friends on social media, their lives appear stable. But behind every cheery-looking Instagram photo lurks the truth: They likely don’t have the means to pay for it all.

Shannon Lee Simmons, a Toronto financial planner, sees both sides of the equation. Those people with the new house on Instagram? They’re her clients. “They’re miserable,” she says.

After honing her chops in the world of private wealth management for high-net-worth clients, Simmons founded The New School of Finance, which caters to people ready to dip their toes into financial planning. The monetary habits of millennials are coming to the fore, as they now outnumber baby boomers in the labour force. At the same time, boomers are finding their retirement plans affected by children who are increasingly relying on their support well into adulthood. When talks between parents and children disintegrate, the younger party turns to Simmons for advice.

They come in feeling “super frustrated and alienated,” she says. “They have information overload—that’s why they’re confused.” She can relate: At 30, she’s a millennial herself. And like her clients, she enjoys posting on her Instagram stream, often showing a split image. The one on the right is Simmons doing something fun, like going to a spa or buying new furniture; on the left, it’s her holding the bill. The message? There’s a lot of pressure to look like you have an interesting life on social media, but not all millennials are honest with themselves about the cost.

Well-intentioned yet outdated advice from boomer parents and their financial advisers can make things worse, Simmons warns. It tends to emphasize ownership—buying a house and a car and paying them off over a lifetime. But that doesn’t square with the economic realities facing Gen Y, which have nurtured the growth of the sharing economy. Many millennials would rather borrow or rent a car, a bike, a dwelling, a power tool.

The advice Simmons dispenses isn’t revolutionary—prioritize debt repayment, live within your means, sock away money into your savings account each month—however, the way she frames it is. Many of her conversations with clients revolve around goal setting. “I introduce them to the power of saving an extra hundred bucks,” she says. “They don’t realize that saving that amount per month can shave four or five years off their student debt.” She typically limits financial plans to easily foreseeable five-year scenarios, and lays off the RRSP hard sell.

One scenario she’s encountered several times is where high-net-worth parents foot the bill for their children without setting expectations or deadlines. An increasing number of youth are taking longer to achieve the typical markers of adulthood—full-time job, spouse, car, house —and it’s a source of shame and anxiety for the millennials receiving assistance. Establishing clear boundaries and expectations for repayment can alleviate some of that guilt for both parties, she says.

The other hallmark of millennials: They value transparency but will withdraw if they feel someone is passing judgment on them. “Nobody likes to admit they don’t know anything about money,” says Simmons. “But at this point you’re 30, and you should, so you don’t say anything at all.”