Millennials may be impulsive and their portfolios under diversified, but at least they are not afraid to seek help from advisors, according to an AMG Funds survey.
The survey explores millennial investing habits and how advisors can come to their rescue. AMG Funds, the U.S. retail arm of Affiliated Managers Group Inc., questioned about 1,000 investors between the age of 18 and 37 (millennials were born between 1982 and 2000, according to the U.S. Census) with household investable assets of $250,000 and more.
A fifth of respondents stated they invest for income while about a third of respondents said they invest to maximize growth. AMG said this was peculiar because 60 percent of millennial investors consider themselves to be “aggressive” investors.
The result could be a sign that millennials are misinformed or do not have enough information on how to allocate their funds. What’s more, AMG found that many millennials put a third of their portfolio into equities with an expectation of 12 percent annual returns.
AMG’s study also found that many millennials are impulsive investors, perhaps because they are amateurs. When an asset is underperforming, over 60 percent of millennials responded that they would sell.
Almost half of survey participants shared their concerns about whether their investment portfolios are as diversified as they should be. Seventy percent of millennials in the study had the wrong definition of proper portfolio diversification. Those respondents believed that investing across a broad range of stocks was a successful portfolio diversification.
“The geopolitical stress and highly variant market environments of the past decade have likely contributed to millennials’ short-term outlook,” said Bill Finnegan, the chief marketing officer at AMG Funds, in a statement. “There’s a strong opportunity for advisors to educate millennial investors on how to position their portfolios to meet long-term risk and return expectations.”