Could a Google brokerage or an Amazon bank compete with established financial firms for investor assets? A recent study suggests that among millennials, almost half would consider eschewing traditional financial firms for a digital alternative.
More than two-thirds of millennials, 69 percent, reported distrust in the financial services industry, according to the 2015 Makovsky Wall Street Reputation Study. They lag behind respondents age 35 to 54, 59 percent of whom distrusted financial institutions, and those 55 and over, at 54 percent.
Along with their distrust, millennials reported lower levels of loyalty to their financial services providers, with 79 percent responding that they were likely to change advisors due to theft of their personal data, 76 percent due to lower costs or fees elsewhere, 75 percent due to negative headlines related to their financial institution, and 68 percent due to the availability of advanced and mobile technology for more helpful financial services.
Millennials, more so than any other generation, are still reeling from recent financial crises, and that may be the reason they are less likely to trust financial institutions.
The study found that millennials were more likely to report financial hardships in the seven years since the 2008 financial crisis, with 33 percent claiming that they live paycheck to paycheck, 29 percent reporting significant spending cutbacks, and 27 percent reporting other financial hardships for themselves and their families.
London-based Ebiquity conducted the study in March 2015 by polling 1,008 randomly selected adults representing the general U.S. population.
Makovsky, based in New York, is an independent integrated communications firm that provides client relations services to the financial industries as well as a broad.