Millennials have a reputation as job-hoppers, and indeed, the data shows they’re more likely than any other generation in the workforce to change employers.

Last year, LinkedIn analyzed its users and discovered that young adults who graduated from college between 2006 and 2010 held around three jobs during their first five years in the professional workforce. That’s nearly double the rate of people who graduated between 1986 and 1990 over the same timeframe in their careers.1

A 2016 Gallup poll2 further supports the notion that Millennials (those born between 1980 and 1995) are more open than any other generation to changing jobs. 60% of the Millennials polled by Gallup said they’d consider a position at a different company – a staggering 15% higher than Generation X and Baby Boomer workers.

But when it comes to saving for retirement, changing jobs is a potential minefield for young investors. What are they doing with their retirement savings accounts when they change jobs? Are they leaving a trail of 401(k)s in their wake, or cashing out early?

If you’re an advisor who works directly with Millennial clients or with affluent families that have Millennial heirs, retirement savings is surely a key topic for you in assessing the financial health of these young adults.

But the Department of Labor’s (DOL) Fiduciary Advice Rule, which took effect June 9, is changing the way advisors must approach these conversations. I recently sat down with Kathleen Beichert, Head of Retirement and Third Party Distribution at OppenheimerFunds, to get the ins and outs of what advisors need to keep in mind when providing advice to Millennials on preparing for retirement.

Here are some highlights from our conversation:

Ned Dane: If you’re an advisor working with Millennials – either directly or as a value-added courtesy to their parents – you’ll discover that more often than not, most of the typical Millennial’s assets are in their 401(k). Does the Fiduciary Rule affect any conversations advisors may have with them on managing those assets?

Kathleen Beichert: This is a generation of frequent job changers, and yes for many Millennials – even those who are high net worth – most of their investable assets are in their 401(k)s. Most advisors would agree that it’s probably not productive to change jobs and leave a trail of 401(k)s. You don’t need three of them. You certainly don’t need four of them. But explaining this to Millennial investors and providing recommendations on the right place for those assets after a job change puts advisors in the crosshairs of the Fiduciary Advice Rule.

Dane: What’s changed since some of the Rule’s provisions went into effect on June 9?

Beichert: Advisorscan freely articulate the options available to Millennial investors, but once they start making recommendations on whether or not to stay in the 401(k) plan or roll into an IRA, that now constitutes fiduciary advice. This wasn’t the case in the past. Today, advisors must now carefully document why it’s in the client’s best interests to follow their recommendations, which is a really big change. Over time, everyone will figure out how to conduct appropriate evaluations and recommendations. Today it probably feels a little fraught with risk, but it doesn’t have to be.

Dane: Let’s say you’re an advisor to a wealthy family and they have Millennial children. One of those Millennials has worked at three different companies and left 401(k)s at each of those places. Before the Fiduciary Advice Rule, you might have recommended – hey, consolidate everything with me as a rollover.

Or, you might have said consolidate it all into the plan at your present employer, or to just leave it where it is. But it was more of a discussion – it wasn’t fiduciary advice. Now that’s changed. Are there any resources out there to help advisors navigate this minefield?

Beichert: Well, there are tools emerging to help advisors evaluate and document the advice they’re providing to clients. Morningstar’s got one. Fiduciary Benchmarks has one as well. But advisors shouldn’t necessarily feel like they have to use a tool. They just need to make sure they effectively document the client’s goals and preferences, and then help them determine whether they’re better off with a 401(k) or IRA.

They need to be able to answer such questions as: Are the expenses higher in one account type or the other? What type of advice is available to the client in one or the other? What range of investment options is available? How and when might they need access to their account?

In a nutshell, advisors have to be cognizant of the features and benefits associated with the 401(k) or IRA and how it compares to what they’re offering the client. And document, document, document.

Dane: What must advisors then do to ensure they’re providing best interest advice?

Beichert: There’s a whole definition around that. To the letter of the law, advisors must first acknowledge their fiduciary responsibility in writing and then adhere to the fiduciary standard of care – which means reasonable compensation and no misleading statements.

Much of this obviously can be considered subjective, but it’s critical for advisors overall to understand their own firms’ rules of engagement as well.

This is the latest installment in our monthly series about issues facing high-net-worth families and their advisors. To learn more about what HNW Millennials want from their advisor, take an interactive look at the Coming of Age study.

Follow @OppFunds for more news and commentary.

  1. ^Source: LinkedIn, April 12, 2016.
  2. ^Gallup, May 12, 2016