Young investors—those under age 40—feel they have more financial challenges than older generations, and yet 81% are very confident they will reach their financial goals, according to UBS.
Slightly more than half of those UBS has dubbed “rising gen” investors said they “have it harder” than others, but they remain overwhelmingly optimistic even after going through the pandemic, UBS said in its recent “Resilience Reigns” study. The survey included 402 people ages 25 to 39 with at least $250,000 in investible assets.
“Investors under 40 have time on their side. Time to plan. Time to recover from market dips. Time to prioritize what truly matters,” the study said. “Even with the impact of Covid-19 on finances and the world, the rising generation is resilient, ready and resourceful.”
“The level of confidence is pretty staggering,” said Giselle Rivera, head of the UBS Rising Gen team. The team supports financial advisors dedicated to helping young people plan for a better future and prepare to weather potential new types of crises not yet on the horizon, UBS said.
Interest in creating a formal financial plan is growing, Rivera said. Sixty-eight percent of the participants in the study said they have or want a formal financial plan. However, in a survey completed among women investors last May, 44% said they want to review their finances but only 13% followed through with their in intentions, Rivera added.
According to the Resilience Reigns study, which was conducted following a year rocked by volatility, half of the respondents said they want to consult a financial advisor and they are willing to pay for the advice.
“Many of today’s young investors want to work with an advisor, but they are more ‘hands on’ than the older generations,” Rivera said. “They are the most formally educated and they want to know their options. They ask advisors a lot more questions.”
The other stark difference revealed by the Resilience Reigns study was that younger investors were not just a little bit more interested in making a positive difference with their investments—they were overwhelmingly committed to it, Rivera said.
Seventy-one percent of the rising gen investors said they want to have a positive impact on society, compared to half that amount of baby boomers, as reported in other studies. Likewise, 63% of the young investors said they want to invest sustainably, compared to 27% of baby boomers.
“Advisors should approach the younger generations differently,” Rivera said. “Advisors need to be patient because young investors want to feel empowered and they want to have choices. The advisors also should be less formal, including considering meeting outside the office.”