Survey: Millennials lead in having a financial advisor, stress saving

By Ayo Mseka

When Natixis Investment Managers (Natixis IM) surveyed nearly 2,500 Millennials around the world, including more than 200 in the United States with minimum investable assets of $100,000, it uncovered some interesting findings. For example, 75% of U.S. Millennials have a professional financial advisor—a higher percentage than either Generation X (67%) or Baby Boomers (70%).

In explaining this finding, Dave Goodsell, executive director of Natixis Center for Investor Insight at Natixis Investment Managers, said, “We know from past surveys that Millennials started saving and investing earlier than Boomers or Xers. Now they want professional help in managing it.”

“In some ways, it’s a generation that’s relied on experts to help them become better at sports as kids, experts to help better position them for getting into college, and experts to keep them in shape,” said Goodsell. “Whether it’s done digitally with an app or in-person, they respect the advice. It appears that as their finances become more complex, financial advice is following suit.”

Millennials have clear financial goals

Also, according to the survey, financial planning is the professional advice that Millennials are the most interested in receiving, no doubt to help them reach what 86% of them say are clear financial goals, including retiring at age 59. Millennials are diligent savers, putting aside 19% of their income for retirement, on average. And when it comes to making investments, 42% of Millennials don’t trust algorithms or artificial intelligence.

“Millennials are beginning to hit a more complicated stage of life, “Goodsell pointed out. “They’re seeking out advice to navigate things like managing retirement savings, education savings, life insurance, and taxes. These issues are specific to your own personal circumstances. It’s hard to feel like you’ve covered details you need just by looking at a few personal finance videos on YouTube. Not only is this why they are turning to advisors, it’s also why they are looking for more comprehensive financial planning services.”

Time with advisor considered important

The survey highlighted something else that advisors should pay close attention to: 82% of Millennials consider time spent with an advisor important to their long-term financial success. For them, the three most important facets of the relationship are:

Helping manage volatility
Discussing financial planning with family
Having someone who listens

So, what can advisors do to attract more Millennials and help them better manage their assets? According to Goodsell, they should pay attention to the things that matter the most to Millennials.

Two key examples are environmental, social and governance (ESG) funds and tax management. Eight in 10 Millennials in the U.S. say they consider their investments a way of making an impact, Goodsell added.

Advisors who are well versed in ESG and who understand that Millennials not only want to align their investment with their values, they also want to generate returns. Millennials are also interested in what goes on under the hood of their investments and expect fund managers to be active owners, he added.

Taxes are another critical area of concern for Millennials, according to Goodsell. In fact, taxes are this generation’s Number One financial fear. “Advisors who can help them keep more of their earning with strategies like direct indexing will be able to address a key issue,” he said.

Risk and volatility

When selecting investments, nearly half of Millennials (48%) say risk is the most important factor they consider. They assess risk in a variety of ways, but most commonly, define it as market volatility. In fact, volatility ranks the highest on their list of investment concerns, according to the survey. Three-quarters (76%) understand that sudden market swings of 10% are a normal occurrence, and 67% also see it as an opportunity to grow their wealth. However, 60% see volatility as something that undermines their ability to reach financial goals.

Given recent market performance, now would be a good time to check in with any client— but especially with younger clients—advised Goodsell. Millennials are probably aware of what happened to markets after September 11, and the Global Financial Crisis, but they have not experienced this kind of volatility personally as investors, Goodsell said.

“Our research shows that Millennials are two times more likely to define risk as exposure to volatility (27%) than failing to meet their goals (13%),” he added. “Even if Millennials say they understand that volatility is a normal part of investing, most will tell you they would pick safety for their assets over investment performance. Proactive outreach will go a long way for advisors.”

Attracting, Engaging Millennials

There are additional steps advisors can take to attract and engage Millennials, according to Brian Haney, founder, CEO, of The Haney Company.

Market volatility can be both a blessing and a curse, Haney said. The younger generations of investors are as willing to follow a financial blogger or podcaster as they are a financial advisor. With so many Millennials taking their advice from unlicensed and untrained content creators and influencers, market volatility has a way of breaking down a lot of that advice when consumers realize it doesn’t work.

With clients having more real time access to data and market information than before, the role of the advisor has evolved, Haney added. “It’s no longer enough to build suitable strategic portfolios and then engage with your clients on a semi-annual or an annual basis. It’s critical that advisors shift to a mentality that is akin to a life coach. The best advisors are masters of behavioral economics and know how to help clients emotionally, not just professionally.”

According to a recent survey, Haney added, 53% of Millennials say they would rather lose their sense of smell than lose their technology. With easy-to establish online banking, to trading your own stocks, to clicking “here” to save 15% or more on car insurance, today’s consumer has a myriad avenues to accomplish their financial goals—and without the help of an advisor or insurance professional.

The challenge is standing out from the crowd in an increasingly saturated space, Haney said. So, what do advisors need to do to attract Millennials and keep them engaged as clients? “Advisors must become digital influencers and provide engaging content that attracts these clients to them,” he said.

In addition, Haney said, three keys to success are:

Develop a standout digital brand as a subject matter expert so that Millennials see you differently and would be as interested in connecting with you as they would a blogger.
Produce engaging content that helps people take one small step, not several, and leaves them wanting more.
Understand how people feel, not just how they think, and connect with them on a personal and emotional level.

Ayo Mseka has more than 30 years of experience reporting on the financial-services industry. She formerly served as Editor-In-Chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]