millennial investing trends

Are you an investment and wealth manager seeking to penetrate the Millennial generation segment? If you do, then you have the right target. Why? Because this nation’s economic future depends on this largest generational segment with a population fast approaching the 100 million mark. However, just as it is rightly termed as the “digital” generation, the Millennials are complex in how they respond to investment. This means all serious firms that want to tap into this immense market potential have an uphill task. They need to break through silent barriers and make their investment offers—whatever they are—attractive to them. This post will disclose some of these barriers and how to overcome them.

Millennial Investing Trends

What the Figures are Telling Us

A recent survey YCharts conducted shows that 53 percent of American Millennials manage their own investments and don’t plan to stop it. Moreover, 41 percent of them have a self-directed brokerage account while only 11 percent of them have an advisor directing them in investment matters. Interestingly, almost one-third of Millennial correspondents conceded they used investment applications. When the surveyors asked those who never use financial advisors and if they intended to use their services in the future, a mere 30 percent indicated that they would.

The survey goes on to show that 44 percent saved more than 15 percent of their pretax income, while 53 percent saved at least 12 percent. Also, 31 percent of the correspondents were apprehensive they were not saving enough money and were not sure of achieving their target of reaching a 7-figure wealth level. The remaining 65 percent were optimistic they would reach this goal by the age of 45 or later. Impressively, 37 percent of the correspondents had between $25,000 and $100,000 in the form of investments and savings. Only 24 percent of them had saved more than $100,000.

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According to the research firm, the shortfalls in the young people’s expectations resulted from the lack of sound investment guidance, poor goal-setting skills, and realistic strategies for reaching their financial or investment goals. So, what does this mean for investment firms that seek to attract America’s largest generational segment? Why do these young people prefer to “go solo” in the name of being self-directed? Answering these questions is critical to penetrating this lucrative investment segment. From the above figures, we can deduce that:

  • Most of these young people saw the 2008 financial crisis, and they still don’t trust the financial system in its current constitution.
  • This generation still lacks the necessary investment knowledge and prudence its parents have.
  • The current stance in the mind of these young and potential investors is a serious attack on our modern financial advice system despite being next in line to administer a $30 trillion wealth transfer.

A Higher Preference for Physical Assets

Despite being termed the “digital generation,” Millennials have the greatest affinity for physical assets. They may seem to “live online” but the truth is that they are more glued to material possessions than other generations. If you doubt this, just check how they spend their money. That is why less than 30 percent of their wealth is in the form of stocks, contrary to its parents’ generation.

“So, if you want to win them over, give them straightforward investment products that are tied to physical assets. They are digital and complex technologically but still want uncomplicated product offers.”

A Low-to-Medium Financial Knowledge Level

Second, they have a lower financial knowledge level than their parents. Therefore, any person seeking to woo them should present them with clear, simple, and understandable investment portfolios. It is necessary to educate them on investment terms without bombarding them with excess knowledge since they live in the most informationally bloated age. That means they have too much in their heads to process, and hence, you will gain little by burdening them with more jargon.

They Still Need to See Value for Their Investment

Studies show that most Millennials don’t know the value of most of the traditional investment portfolios. Therefore, it is necessary to show them their value if you will win them to sign up for your offers. Unlike their parents, you need to understand their reasons for investing in a given portfolio before showing them your reasons for asking them to invest in it. This means you should understand their priorities and align your message accordingly.

Parting Shot

Even though Millennials are our country’s biggest generational block, they are a complex lot in investment matters. This discussion showed you some of the barriers that investment companies and wealth managers should overcome to get them onboard. I hope this post has shown you how best to approach and win them over to your investment portfolios.