Possibly the millennials—those born between 1982 and 1994—are jealous of all the attention baby boomers have been getting since January 1, 2011, when the oldest members of the baby boom generation turned 65. On that day—and for every day for the next 19 years—10,000 baby boomers will reach age 65.
Surveys show that millennials don’t trust financial advisors. However, surveys can be damaging, especially if their conclusions are questionable. But most consumers believe survey results because they’re easy to remember. And in a sound-bite society where content is king and most young people are short on patience and in a frenetic rush to succeed, many consumers opt not to read. Why bother when they can absorb bite-size, real-time content 24/7 on their iPhones? The average consumer hardly questions survey standards and methods, such as the number of people surveyed and whether they’re a representative sample.
A survey conducted by research firm Corporate Insight found that that the investment industry is discriminating against millennials. Based on a survey of 500 advisors, only 30 percent of financial advisors are actively looking for clients under age 40. It’s widely (but incorrectly) believed that advisors prefer older clients because they have money, and thus are not interested in millennials. It’s time to right the scales and bridge the millennial/financial advisor misinformation gap.
A report by research firm Accenture showed that the millennial generation is determined to leave a financial legacy for their children. Millennials also tend to be more financially conservative than baby boomers and Generation X.
According to the U.S. Census bureau, millennials are the largest generational group in recent history at 92 million, larger than the boomers at 77 million. They have less money to spend, according to the bureau of labor statistics, due to smaller incomes. They have twice the debt—in the form of student loan debt—of those from 10 years ago, according to the Federal Reserve. As a result, commitments like marriage and home buying are being delayed. With the unique characteristics of this group, their need for financial advice is considerable, but needs to be differently formatted than previous generations. The supply of those serving millennials is adapting to this new type of consumer/investor.
Millennials have a harder time with finding advisors because of the popular notion that they need a portfolio of securities to be managed, and therefore, simply do not look for an advisor. Many in this age group simply are not aware of the other services advisors offer, so they do not conduct a search for someone that can help.
On A Better Path
Angela Poupart, the daughter of missionaries, is 31 and grew up in the Midwest. Due to good parenting, Angela was unaware she came from a lower income household. Early on, she was taught the perspective that climbing the corporate ladder would grant her success, but that never appealed to her, and her overall quest wasn’t centered around becoming a millionaire. She is a creative person who likes to understand the functionalities of the things around her, which led her to becoming more inquisitive about her finances and how they were being managed in her life.
She went to community college to save money, then transferred and graduated from Ohio State University with a degree in New Media and Communication Technology. She is fascinated with the topic of human computer interaction and understanding how people interact with product interfaces. Upon graduating, she accumulated $30,000 in school debt, something she is not comfortable with as her parents taught her that debt can be very problematic. Angela wants to accomplish several things in her personal finance journey. She wants to invest for retirement, but also fund her passions. She feels that there is a narrative that investing is only for retirement, but not for being a tool to pursue your dreams, which for her may include starting a business one day. Her frustrations stem from not knowing where to start looking for the right resources to help her and feeling unsure of which steps to take.
Angela went to someone who has been in the financial services industry for over 30 years and asked this person what she should do. The reply? “Until you have $25,000 to invest, there is not much you can do.” This same person also suggested reading the Wall Street Journal every day. She did read the WSJ for a while, but was not able to connect to it, and found it was not answering her questions. Angela told me this was not the first time someone gave her advice that was not helpful. This advice was pretty bad for her; in fact, this is simply not correct for anyone in her situation.