In Loco What?

The Millennial generation views benefits, especially retirement plans, very differently than older generations do — a trend that will reshape key aspects of the relationships among participants, plan sponsors and advisors. In a fascinating article in the latest issue of Benefits Quarterly magazine, generational authority Neil Howe traces what it all means.

“Recession-strapped young workers are taking a conservative new approach to financial, medical and other life risks, and they want their employers to provide comprehensive benefits that support them, guide them and protect them from these risks,” notes Howe. In this way, Millennials tend to view their employer as “the new in loco parentis employer,” he writes — expecting the employer to play the same protective role that schools, colleges and parents previously played for them.

As opposed to Boomers and most Gen Xers, says Howe, who “never met a benefit they didn’t want to cash out,” Millennials are completely different:

56 percent agree that benefits were an important factor in choosing an employer, 25 points higher than Boomers; and

63 percent say that benefits are an important reason why they stay with their employer, more than any other age group.

Why Generations Matter, a report by Howe’s firm, LifeCourse Associates, finds that among the generations in the workplace, it’s Millennials who value employee benefits like financial planning, tax prep assistance and relocation assistance most highly. 

Not convinced of Millennials’ conservatism and focus on the future? According to Howe, 56 percent of them are “very concerned” about having enough money for their children’s college education. That’s higher than any other age bracket, including Gen Xers (52 percent) and younger Boomers (44 percent) — who are far more likely to actually have children.

Most importantly for advisors: Millennials’ attitudinal drivers are risk aversion, long-term planning and institutional trust. Writes Howe: “There is a new assumption that long-term success demands near-term organization and achievement — that what a young worker does this week will absolutely determine where she will be 10 or 20 years down the line. That, at least, is the new perception, and it’s a reversal of a 40-year trend.”