A generation larger than the boomers: Overlook them at your own risk
By Vanessa De La Rosa
Here’s some good news for advisors (a rarity, I know): There is a generation of investors who crave financial education more than any other age group and who stand to inherit $30 trillion over the next 30 years. This generation is larger than the baby boomers and is over one-and-a-half times more eager to pass along wealth to subsequent generations. Who are these prospective clients?
Millennials. A demographic that includes 80 million 20-somethings, many of whom are not only investing or ready to invest, but are slated to inherit quite a lot to invest with from their boomer predecessors. A recent Accenture study, which surveyed over 1,000 U.S. millennial investors, reveals that 71 percent of these Gen-Yers are investing, 44 percent want to become investing masters, and 40 percent feel driven to pass along their wealth to younger generations.
What’s the catch? Less than one-fourth — 22 percent — of these young investors are using a financial advisor, and the majority of these are solely transactional relationships. (I did say good news was rare.)
While millennial investors are attractive prospects for financial advisors, they are more wary and less trusting than older age groups. Forty-three percent of people aged 21-30 described themselves as conservative investors, compared to 31 percent of baby boomers and 27 percent of Gen-Xers. Millennials are more skeptical of financial advisors and are four times more likely to question their advice than any other generation. And they rely way more on digital tools than expertise in person.
As a millennial myself, I can relate. Having entered the job market at the peak of the Great Recession and — though I did not yet have assets at risk — watching the impact of the market crash on my family, I can certainly see why this generation of investors is cautious and conservative, and also why it is eager to try to master the system and guarantee wealth for its offspring.
Alex Pigliucci, Global Managing Director of Accenture Wealth and Asset Management Services and conductor of this study, seems to attribute the same explanation as to why millennials are so wary:
“Growing up, millennials have witnessed many boom and bust cycles — the dot-com bubble burst, mortgage crisis, two stock market crashes… They have yet to experience a long-lasting bull market, and all of this volatility has made them exceedingly skeptical of fast money and fast returns. “
So what eases millennials’ minds? Accenture shows that they are deeply attached to a digital lifestyle; they turn to all things online: video series, seminars, webinars, virtual meetings with advisors, investor-led online education and connecting with professionals via social media.
It seems that millennials stubbornly insist on carrying the responsibility for their financial welfare on their shoulders alone. Forty-four percent said they “spend a lot of time researching alternatives before making a major purchase decision,” and shy away from sharing too much personal information with advisors.
“This poses a fundamental challenge for financial advisors who will see the greatest transfer of wealth in history from boomers to their heirs over the next several decades,” adds Pigliucci. “But counter to prevailing wisdom, our research suggests millennials are a highly viable target for advisors.”
These young investors aren’t going to let you ignore this fact for long: Digital technology and social media is their language, and it could be your only way to communicate your expertise and integrity. Position and personify your brand online, bite the bullet and learn the technology, and reach out to this generation so hungry for trustworthy information.