Millennials Are Saving, But Hesitate to Use Financial Advisors

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YCharts, a modern investment research platform that enables smarter investments, today announced the results of the company’s 2018 Millennial Saving & Investing Habits survey, revealing that millennials aren’t convinced of the value provided by financial advisors, opting instead for self-directed brokerage accounts, yet are more financially responsible than they get credit for.

Millennials are self-sufficient, not sold on financial advisors, strong savers

The Millennial Saving & Investing Habits survey data revealed that 53 percent of millennials (ages 22-37) who participated in the survey manage their own investments and plan to keep it that way, demonstrating that they are very much financial “do-it-yourselfers.” Forty-one percent have a self-directed brokerage account, while only 11 percent have an advisor-directed brokerage account. Further, 31 percent utilize investing apps or robo-advisors, and only 30 percent of millennials who don’t use an advisor say they likely will in the future.

Millennials often get a bad rap for being poor savers, yet the data shows 44 percent save more than 15 percent of their pre-tax income, while more than half (53 percent) are saving at least 12 percent.

“The business model of many of today’s financial advisors is under attack,” said Sean Brown, CEO and President at YCharts. “With the $30 trillion wealth transfer underway and financial advisors being asked to justify their fees, it’s critical to understand the needs of the millennial generation. Our data indicates that millennials are ambitious, aggressive savers, and with the current market conditions, financial advisors have a limited opportunity to demonstrate their value proposition.”

While independent, millennials are unsure, have unrealistic investing goals

Three in ten (31 percent) of millennials are "somewhat" or "very nervous" about whether they're saving enough, but even the top savers have an unrealistic view of how quickly their savings level will lead them to seven-figure wealth; 65 percent of millennials think they'll reach seven-figure wealth by age 45 or sooner.

Despite those lofty aspirations, 37 percent of millennials currently have between $25k-100k in savings and investments, while just one-quarter (24 percent) have over $100k. Given reality’s shortfall from millennials’ expectations, some financial guidance, goal-setting, and a realistic strategy to reach those goals could go a long way for millennials and their portfolios.

How can financial professionals appeal to millennials?

If you are a financial advisor, the results of this survey may be a shock to the system. Millennials either aren’t aware of the value of a financial advisor, or they simply don’t think traditional wealth management is worth it. Based on the survey’s results, YCharts offered some advice to help advisors get started on a strategy to better cater to millennial needs:

  • Give them a wake-up call — It makes sense that millennials, especially the younger ones, are slightly short-sighted. Make the value of an advisor more tangible by bringing planning for major life events, such as purchasing a home, preparing for children, or planning for emergencies, to the forefront of your value proposition. Millennials seem to be overly optimistic about how achievable their goals are. Representing large expenses visually or showing how drawing on savings impacts future portfolio value may be especially effective.
  • Play to the DIYers — Engage millennials early and often as they enjoy on-demand access to information. This may require more of a time commitment, like devoting a sleeve of a portfolio to a client’s discretion or allowing them to do some research and pick their own investments. It could also be as simple as emailing them a daily update on their portfolio, or even an article that’s relevant to their holdings and asking for their thoughts, rather than simply giving them your conclusion.
  • Be resourceful & accessible — In the age of the internet, millennials can learn about any topic with a few Google searches; you can increase your perceived value by ensuring you’re the one with the information that answers their questions. Consider implementing an education component to your practice. By developing a blog, or another form of digital communication, you can be relied upon as a resource for questions about personal finance, investing, and saving that someone early in their career may be asking.
  • Know their “why” — Understanding why millennials save is the first step in engaging them. Stay aware of emerging technology trends and devote resources to leveraging financial technology. Show the next generation of investors that you recognize their priorities, whatever they may be. Communicating on their preferred channels can be more successful than quarterly lunches and research binders. Technology enables quick, effective touchpoints that can lead to stronger relationships over time.

Dedicated to understanding and improving the millennial/advisor relationship, YCharts data, tools, and visualizations provide advisors with a solution to better develop and communicate investment ideas. For more insights from the Millennial Saving & Investing Habits survey, please see the detailed report.

About YCharts

YCharts is a financial data and investment research platform that provides investors with comprehensive data, powerful visualization tools, and advanced analytics. Industry professionals use YCharts for idea generation, analysis, alerts, and updates from real-time news feeds to monitor the markets. YCharts has quickly become the market’s go-to fast, intuitive, cost-effective financial research platform. For more information, visit ycharts.com, contact sales@ycharts.com, or follow us on Twitter @ycharts.

About the Millennial Saving & Investing Habits survey

An online survey was conducted by YCharts with 600 American participants, 478 being in the Millennial age range (22-37), between July 9 and September 3, 2018. Respondents voluntarily participated in the survey as it was posted on social media platforms, online forums, and YCharts digital properties.

More news and information about YCharts

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Business Wire: 14:00 GMT Thursday 6th December 2018

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