Advisers looking to attract millennial clients need to understand that members of that generation are cautious about their financial choices, well-informed and tend to use technology to invest, according to speakers Tuesday at Inside ETFs+, part of Wealth Management EDGE at The Diplomat Beach. Resort in Hollywood Beach, Fla.
Millennials experienced long-term trauma from going through the Great Financial Crisis, according to Travis Walker, business solutions and diversity advisor with Allianz. Many lost their jobs and struggled for years to find a new job, while their parents may have lost a significant portion of their savings. This experience left millennials more focused on building a cash buffer to protect themselves from future economic shocks, rather than investing their money for future returns. The pandemic and technology valuations that crashed in 2022 only compounded these trends. Walker told the story of his younger sister, who lost her job with Countrywide Mortgage. After that, she was barely holding on to the house she had just bought. Last year, she told Walker she was let go again — this time, from Silicon Valley Bank. But in 2023, she was prepared for the aftershocks because she saved her money over the last decade.
“If a cat jumps on a hot stove, it won't jump on a hot stove anymore, but it might not jump on a cold stove either,” Walker said, referring to his sister's approach to collecting money. “Now you can talk about whether that's the smartest move, given that she was on the sidelines for most of it and didn't make a lot of investments. But when you talk about behavior and what changed her mindset, she got burned once in 2008, and by the time 2024 came around, she could send a message saying 'Lol', that she was out of a job. (Walker's sister has since hired a financial advisor.)
In addition to the lasting impact of those experiences, millennials often struggle with high student debt, which makes it harder for them to become homeowners, start a family, build a nest egg or save for retirement, he noted. said Liang Zhao, CEO of Vansary. digital event and marketing agency. This also makes them much more cautious about their investment choices. Zhao cited a survey that found 61% of millennials say financial security is the top goal for how they approach their savings.
Another attribute that distinguishes millennials from their parents is that they are very comfortable using technology to invest. This includes robo-advisors, online retail brokerages, AI and cryptocurrencies, according to Zhao. “The participation of millennials, as well as Gen Z, is much higher in the digital realm, as well as on their phones. Let's talk about mobile interfaces and the ability to access retail investments over the phone. Hello, Robinhood!” she pointed out.
Zhao cited surveys from the Motley Fool that show, in part because of this tech savvy, 55% of millennials, a higher percentage than any other generation, own individual stocks. Forty-seven percent have retirement investment accounts. Forty-three percent—also the highest percentage of any generation—own cryptocurrency. And another 33% own mutual funds.
This is also trickling down to Gen Z, 37% of whom already own stocks and have retirement accounts despite not having much money, Zhao noted.
What does this mean for financial advisors? Don't treat millennials like “idiot kids” who don't know what they're talking about, Walker said. “If you're dismissive, you're already in trouble.”
Advisors also need to ensure their technology is up-to-date to meet millennials' high expectations for technology adoption. Walker noted that if you don't have an online presence, you may not exist for those customers. Similarly, you can turn people away if your website looks outdated.
Advisors also need to prove to millennial clients that they bring value to the table, either in the services they receive or in working toward goals that are important to them, such as making a positive impact on the environment or using their investments to to allow them to Travel.
“When it comes to the millennial investor, the goalposts have definitely moved,” Zhao said. What we have to give them looks very different.”