With many now firmly in the workforce and entering middle age, millennials are ready for deeper engagements with advisors, according to a recent survey, but they remain nervous about investing and deeply suspicious of the financial industry.
Edelman Public Relations found that most respondents were risk averse and skeptical of the financial planning and investment industries in a survey of 1,000 affluent millennials with at least $50,000 in net worth or $100,000 in annual income.
While 80 percent of affluent millennials consider themselves financially successful, according to the survey, only 41 percent are accessing a professional financail advisor.
When results were compared to a similar survey conducted by Edelman in 2016, it was found that millennials had increased their use of credit cards and peer-to-peer payment applications, were more likely to open life insurance policies and IRAs, and were much more likely to engage a personal financial planner or a robo-advisor to help get their finances on track.
In 2018, 25 percent of the survey respondents had engaged with a financial advisor, up from 13 percent in 2016. Similarly, 12 percent of the 2018 respondents were using robo-advisors, up from 4 percent in 2016.
When affluent millennial responses were compared to a sample of non-affluent millennials with less than $50,000 in net worth, they were only slightly more likely to report progress on personal goals like completing their education, getting married and starting a family. However, affluent millennials were much more likely to say that they own a home and have the job of their dreams than the non-affluent sample.
Affluent millennials are still most likely to be do-it-yourself investors, with 35 percent of the respondents claiming that they make all their own financial decisions without any help or advice. Another 27 percent said they consult financial professionals for affirmation, but continue to make their own decisions. Only 15 percent of affluent millennials retain a professional money manager.
Trust continues to be an obstacle for financial professionals interested in serving millennials. According to the survey, 77 percent of affluent millennials view the financial system as rigged to favor the rich and powerful at the expense of ordinary people like them. The same number of respondents felt that the bad behavior of the financial industry could precipitate another financial crisis. Another 75 percent fear that the global financial system will be hacked and their personal financial information stolen.
Millennials also don’t trust recommendations from advisors working on commission: 80 percent said that they were suspicious of the commission revenue model in the financial services industry.
More than half of the survey’s affluent respondents said that they had achieved financial independence (57 percent) and had built a six-month emergency fund (52 percent.) Significant portions had also written a long-term financial plan, 46 percent; maxed out their 401(k) contributions, 45 percent; and completed saving for their children’s education, 38 percent. Non-affluent respondents were significantly less likely to report achieving financial goals.