Millennial investors are more
conservative and less trusting of financial advisors than baby-boom and Gen X
investors, and more inclined to consult other sources before accepting
financial advice, according to an Accenture survey of more than 1,000
high-income, digitally savvy U.S. investors.
The survey also revealed that
millennials are the most determined of the three generations to learn how to
invest and pass along wealth to their families.
Forty-three percent of millennial
respondents (age 21-30) described themselves as "conservative" investors,
compared with 31% of baby-boom respondents (age 46-70). Millennials were also
significantly more likely than baby boomers to say they prefer "tried and true"
investment options (27% vs. 19%, respectively). They were four times more
likely than baby boomers (28% vs. 7%, respectively) to say they are unwilling
to act on the advice of a financial advisor without first consulting other
sources. Forty-four percent of millennials said they "spend a lot of time
researching alternatives before making a major purchase decision"-compared with
33% of baby boomers.
"Surprisingly, the millennial
generation has emerged from two boom-and-bust cycles even more conservative
about investing and more skeptical of financial advice than the generations
that were hit hardest by the market," says Alex Pigliucci, global managing
director of Accenture Wealth and Asset Management Services. "This poses a
fundamental challenge for financial advisors who will see the greatest transfer
of wealth in history from boomers to their heirs over the next several decades.
But counter to prevailing wisdom, our research suggests millennials are a highly
viable target for advisors."
According to the survey,
millennials are the most driven among the generations to build and pass along
wealth, and the most interested in mastering investment strategy. Forty percent
of millennial respondents said they are "determined" to pass along wealth to
their families, compared to 25% of baby boomers and Gen Xers (age 31-45).
Forty-four percent of millennials described themselves as "extremely"
interested to improve their understanding of investing compared to 38% of older
respondents.
The survey points to unmet demand
for online investor education and advisor-interaction tools that could increase
millennial investing and help bridge the trust gap with financial advisors.
Presented with concepts for new online educational resources-ranging from
online investment forums and educational web-based video services, to virtual
advisor chats, webinars, and social media-millennial respondents showed
overwhelming interest.
"The behaviors and attitudes of
millennials are not just a matter of long-term strategy for wealth managers;
they are a leading indicator of the need for change today," says Pigliucci.
"The recent financial crisis brought a sea change in attitudes toward investing
and distrust for the financial industry across all generations. The explosion
of digital and social channels in everyday life is simultaneously spilling into
consumers' relationships with their financial institutions. With half of all
baby-boom investors currently active in social media and a vast majority active
online, the innovations that will capture the millennial generation also will
help capture the most coveted demographics among Gen Xers and baby boomers."
According to Accenture's research,
there are more than 75 million digitally savvy investors in the United States
with high-income, assets, and education, which Accenture refers to as
"Generation D" or "Gen D." This highly coveted investor demographic, upon which
Accenture's survey focused, makes up 44% of the online, U.S. population, aged 18-65,
and represents approximately $27 trillion in total assets.
Gen D members see investing as a
viable path to building and passing wealth to future generations, and they
recognize the need for financial advice. But they are less and less likely to
view financial advisors as trusted sources. For example, 59% of respondents
across all generations said they had actively sought financial advice recently,
but only 40% had turned to a financial advisor, according to the survey.
"The evolving investment behavior
of Generation D-from baby boomers to Gen Xers and millennials-has brought a
seismic shift in the client-advisor relationship. Wealth managers who provide
transparency, education, and tools that make investing easier to understand-and
those that provide the rationale behind their recommendations-will be
positioned to achieve trusted-advisor status among market-leading
demographics," says Pigliucci.
Accenture Wealth and Asset
Management Services provides management consulting, technology, and outsourcing
services to financial institutions to optimize analytics for wealth and asset
managers, improve advisor productivity, help drive sales, reduce costs, and
manage risks. Its clients include eight of the top ten global wealth managers
and seven of the top ten global asset managers.
View the report
[This article was posted on February 20, 2013, on the website of ABA Banking Journal, www.ababj.com.]
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