The 5 Faces of Gen Y Investors

1) Lack of risk orientation

• 40% of Gen Y agreed with the statement “I will never feel comfortable investing in the stock market.”
• Gen Y investors agreed that they are likely to feel overwhelmed by all the choices they have (54%), put off investment decisions (47%), and consider themselves to be savers more than investors (59%).
• 30% of Gen Y said that their primary investment objective was protecting principal/not losing money, only marginally smaller than those who said their primary goal was growing assets, at 34%.
• Gen Y has allocated more money to cash than other age groups, at 30% on average—nearly as much as they have allocated to U.S. stocks/stock funds (33%).

2) Worried about debt, retirement; spending increasing

• 38% of Gen Y investors say they live paycheck to paycheck and that saving consistently is not an option.
• Gen Y investors were more likely than others to have increased spending on both discretionary (42%) and nondiscretionary (49%) expenses over the past 12 months and add debt as well (36%).
• 41% agreed that they were concerned about the amount of credit card debt their households carry.
• 54% of Gen Y agreed with the statement, “I’m more concerned than ever about being able to retire when I thought,” and 44% agreed with the statement “I have lowered my expectations about the quality of my life in retirement.”

“We’ve identified significant red flags,” Finnegan added. “However, Gen Y has exhibited certain positive attributes that, over time, may help them transition to a less conservative approach.

3) Optimistic and engaged

• 64% and 78% are optimistic about the economy and their own five-year future, respectively.
• Gen Y is more likely than Boomers to say they are very knowledgeable/expert investors, 39%.
• 62% of Gen Y agreed that they enjoy investing.

4) Open to advice

• Of those who reviewed or rebalanced in the past 12 months, 89% of Gen Y, more than any other age group, reported an advisor playing a key role.
• 69% reported at least consulting with an advisor regarding investment decisions, more than other age group.
• 59% of Gen Y investors have received investment advice in the past 12 months.
• 42% report an increased need for investment advice in the past 12 months.

5) Evidence of a disciplined approach

• 71% report they are disciplined about putting aside money for saving and investing.
• 52% report an increase in savings outside of retirement accounts over the past 12 months.
• 58% agreed with the statement, “Since the downturn, I prefer to pay with cash or debit cards as much as possible.”