Among some of the stereotypes perpetuated about young investors are that they rely on social media for financial guidance, ignore professional advice and resist proven methods for investing. However, a survey released Tuesday by Merrill Lynch Private Banking and Investment Group found those stereotypes may be largely exaggerated.
The Young High-Net-Worth Insights Survey was conducted in February by Phoenix Marketing International among 153 investors between 18 and 35 who had at least $1 million in investable assets.
Most respondents said they understood their parents’ approach to investing and of those, many say their own investing style was similar. More than two-thirds said their parents had the right idea about investing and 65% said their parents’ approach still worked in today’s economy. Less than half said they knew more about finance or investing than their parents.
“Young investors want to know what to do over time and how to align that with their goals,” Michael Liersch, director of behavioral finance for Merrill Lynch, told AdvisorOne on Monday. They want to understand their investments and strategy, but they want guidance, too. Just 19% of young investors said they had a high level of understanding of financial subjects, and 25% said they had very little knowledge.
Almost 60% of respondents said they work with an advisor, but 72% of those also think of themselves as self-directed investors. “A lot of investors have the notion that you’re either conservative or aggressive; you’re self-directed or work with an advisor,” Liersch said. “You can be all of the above.”
In looking for an advisor, someone who understands their needs is the most important criterion, the survey found. “They want to be seen as a unique individual,” Liersch said, “and how they want that done is most critical. Start with the idea that there are no right or wrong decisions. There’s just the right approach for you.”