Millennials and Investment: the money, the mobile and the new mindset

Worldwide millennials are estimated to be worth over 2 trillion dollars. Secondly, they are entering their prime earning years. And thirdly, they stand to inherit some of the largest investment portfolios ever accumulated by the previous baby boomer generation. However, their attitudes, sentiments, ambitions are different, even disruptive, less trustful and definitely more discerning than their parents.

Also known as Gen Y, they were born after 1980 and reached adulthood at the turn of the century, currently anywhere between 18 to 36 years of age. So what’s so special about them? Well, quite a number of things. When it comes to finance, millennials are not their parents. They think differently and their expectations are entirely different. They’re tech-savvy and independent but also wary of financial markets and complicated jargon. Most importantly, this is the wealthiest young generation in history.

What’s meaningful for Millennials?

  • Millennials are more concerned with the state of the world.
    They don’t believe that money is the only measure of success. They want to feel they are making a difference beyond the confines of their own lives. Therefore many are looking to invest with purpose, directing their capital into investment vehicles that can, together with good returns, deliver positive social and environmental impact.
  • Despite the dot-and-dash world of digital, millennials remain conservative.
    This has a lot to do with the fact that their impressionable years were influenced by the 2008 recession and ensuing hardships experienced by their parents. They are skeptical of long-term investments and distrustful of advisors and financial institutions. As a result, they now give far more value to brands which act in a socially responsible manner.
  • Mindful that they still may have to care for their parents in old age, millennials are concerned with relationships and future responsibility.
    They prefer physical assets and simple products that are easily managed and directed. They still believe in savings as a vehicle for growing their money safely.
  • Millennials want access to as much information as they can get.
    Tech-driven with a global view, they fully believe they will be successful, but only with investments that they can understand and control wherever they are. Betting on a whole industry or a trend rather than specific companies is one of the new ways they view investing. As many as 54% see entrepreneurship as their future.
  • They like to have instant online access to wealth management products, services and professionals – including both local and global perspectives. This information must be on-the-go available via mobile. They understand and expect easy access to new wealth management tools and technology.
  • Millennials embrace self-education and expect their financial service providers to offer tutorials, videos and other interactive tools to enable decision-making.
  • Affluent millennials use a range of advisors.
    Differing from their parents preference of trusting just one person, they seek online advice, consult with bank advisors, accountants, mutual fund representatives and friends or relatives. They like written financial plans.
  • Connected to the world through technology, millennials are the first generation to be truly global.
    This mindset is reflected by the fact that many are willing to work anywhere, seeking employment in foreign countries and aligning their portfolios with greater exposure to foreign or global securities, or keeping money in offshore accounts.

What Financial Advisors need to know

  • The first key factor is that millennials do not necessarily have the financial know-how of their parent’s generation. Therefore the need for world-class investment advice still stands. However, you will have to find ways to counteract the negative perspective millennials have of the financial and banking industry as a whole.
  • Impact investing is the key to the millennial mindset and therefore you will need to understand their priorities and preference for philanthropic-tailored portfolios.
  • Wealth management firms must demonstrate a global perspective in their product or service offerings. This perspective must also be built into the asset allocation and diversification planning.
  • Millennials have no patience with long-winded, verbose language in communicating financial matters. They prefer simple, direct language. Not because they are necessarily less educated, but because they are the generation used to faster interaction, quicker results, snappier decisions. They like to learn on the go. Don’t waste their time with stuff that takes too long to decipher.
  • And have you moved into their tech-world of communication yet? Are you keeping contact, advising, informing, entertaining through the myriad of platforms they are currently using? Are you up to date with what they are saying, feeling or believing in? Are you truly au fait with what appeals to the affluent millennial who wants to participate in the sharing economy?
  • Here’s what they like: online investment communities promoting sharing and discussion of investment ideas; charitable giving strategies such as local sustainability projects; online crowd funding promoting entrepreneurial initiatives.

Wealth management is evolving at a considerable pace to meet the new needs of younger investors. Clients today are in fact more in control of the wealth management process than ever. Financial advisors are aware and ready to listen. Firms are aware and geared to alleviate sometimes healthy skepticism through sound, honest advice. Advisors are open-minded enough to know that even if their approach is different, young adults still want to make wise and pragmatic choices.

Find the art – and heart – of investing

At Foster Wealth we believe in meeting our clients’ personal investment needs. From cautious to adventurous, from wary to wise – we have grown our know-how as we have grown our business. Above all, we are well placed to understand the canny and the caring investor who wants to make a difference – as we do. We believe that responsibility in the financial world is key, honesty and integrity are watchwords, and opportunities to do good are everywhere. And we like to work with people who think like us.

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