February 6, 2013

Less-Trusting Millennial Investors Pose Challenge to Advisors

Young investors intent on understanding investing, passing along wealth

Millennial investors have emerged from two boom-and-bust cycles more conservative about investing and more skeptical of financial advice than older generations who were hit hardest by the market, according to an Accenture survey released Wednesday.

The survey of some 1,000 high-income, digitally savvy U.S. investors also showed that millennials were the most determined to learn how to invest and pass along wealth to their families.

“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,” Alex Pigliucci, global managing director of Accenture Wealth and Asset Management Services, said in a statement.

“But counter to prevailing wisdom, our research suggests millennials are a highly viable target for advisors.”

According to the survey, 43% 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 preferred “tried and true” investment options. 

They were four times more likely than baby boomers to say they were unwilling to act on the advice of a financial advisor without first consulting other sources. Forty-four percent said they “spend a lot of time researching alternatives before making a major purchase decision,” compared with 33% of baby boomers.

Forty percent millennial respondents said they were “determined” to pass along wealth to their families, compared with 25% of baby boomers and Gen Xers (aged 31-45). Forty-four percent described themselves as “extremely” interested in improving their understanding of investing, compared with 38% of older respondents.

Accenture said the survey pointed 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, it said, 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,” Pigliucci said.

“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.”

Accenture’s research has found more than 75 million digitally savvy investors in the U.S. with high income, assets and education, and refers to as “Generation D” or “Gen D.” This investor demographic, on which Accenture’s survey focused, comprises 44% of the online U.S. population, age 18-65, and represents a staggering $27 trillion in total assets.

The survey found that Gen D members saw investing as a viable path to building and passing wealth to future generations. They also recognized the need for financial advice, but were 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.

Reprints Discuss this story
This is where the comments go.