We often hear about the tremendous amount of student loan debt that young professionals are burdened with. In fact, the amount of student loan debt in our economy is currently a staggering $1.2 trillion. This debt is a result of the expectation that college degrees lead to high-paying careers — which many new grads will tell you is simply not true. Many young professionals are living in expensive rental units, living paycheck to paycheck, and working in unfulfilling jobs just to make ends meet.
So, we ask: Do we just stand by and watch the chasm of haves and have-nots grow? Do we just wait around for baby boomers to kick the bucket so that the anticipated $30 trillion in generation-to-generation wealth transfer can happen? Or do we do something about it now?
It can be argued that affluent baby boomer families have the resources to invest in their young professional counterparts. We already see a collaboration happening on the venture capital investment level (remember the story about Yahoo buying a teenager’s company)? So why not go one step further? What if the investment in young professionals was more privatized, more personal, and more lucrative for all parties, especially families?
Here is what we propose: The two largest generations in our population today, the baby boomers and young professionals, team up, collaborate and innovate. This proposed collaboration between the two generations can push the economic needle forward to create a positive step in the right direction for San Diego.
We are a city and region of deep-rooted entrepreneurship. The very entrepreneurship that this city was founded on should be used to help young professionals thrive. By encouraging this younger generation to pursue their goals of entrepreneurship, we have the opportunity to enable local job creation and business growth that is truly needed to make San Diego’s economy thrive.
There are many ways baby boomer parents can help their young professional, need we say “millennials.” For example, what if entrepreneurial parents invested in their entrepreneurial child’s business venture by becoming an advisor or co-owner? Or perhaps baby boomer parents can invite their young entrepreneur children back into their home and allow them to rent “office space” for their start-up businesses. For those with the resources, why not collaborate with your young professional to purchase a home together, rather than throw money away at rent?
What about paying off their student loan debt on the federal “retail” side and privatize it with a formal agreement to the family? These “family investments” don’t need to be gifts but can be a loan against the family wealth bank. These loans and transactions can be structured numerous ways, with benefits to both parties. Think about the potential a young professional can have when he or she is not burdened with debt and a proverbial career ceiling
Finances are only one component to this puzzle. The most critical need is to educate this younger generation with business knowledge. Seasoned business professionals have an opportunity to give back their sage business and life advice to this eager generation. It is time to start “re-parenting” and become business mentors to young professionals, providing them with extensive business advice they never had the opportunity to gain in the workplace after the recession.
This collaborative concept might not be entirely possible for many households, but many families with the right net worth and creativity can take charge of the young professionals’ dilemma and create value now.
We argue the next 10 years will be growth years, with this new collaborative economy at the core of the grand design. Instead of baby boomers and young professionals moving apart, let’s encourage the collaboration and financial growth of both parties. Call a family game night and host your own “Shark Tank.” It may be rewarding.
Chris Coughlan Jr. is founder and CEO of BigFish Counsulting. Grant Webster is a senior wealth manager at AKT Wealth Advisors LP.