Millennials are uncertain about making investing decisions and show little interest in robo advisers, despite having come of age in a digital world. In fact, they prefer working face to face with a financial professional, according to a research report, “Uncertain Futures: Seven Myths About Millennials and Investing,” from the CFA Institute, in partnership with the FINRA Investor Education Foundation.
“This study dismisses many of the assumptions that are commonly held about Millennials and why many of them are not investing,” says Gerri Walsh, president of the FINRA Investor Education Foundation. “These findings help us better understand the needs and wants of Millennials to further investor education efforts that will engage Millennials in the financial markets.”
The first myth is that Millennials have lofty financial goals. Truth be told, Millennial investors and non-investors expect to retire at the standard age of 65. Non-investing Millennials are focused on surviving month to month. Millennials with taxable accounts have financial goals mirroring Gen Xers and Baby Boomers, such as saving enough to retire when they want and to live comfortably in retirement.
The second myth is that income and debt are key barriers to investing. While those are factors that keep some Millennials from investing, 39% of Millennials without taxable investment accounts say they are also not knowledgeable about investing.
The third myth is that Millennials are overconfident about investing. Only 21% of non-investing Millennials and Millennials with only retirement accounts are very or extremely confident about making investment decisions. For Millennials with taxable accounts, this is true for 47%.
The fourth myth is that Millennials are skeptical of the financial services industry and financial professionals. In fact, 72% of Millennials working with a financial professional are very or extremely satisfied with the service they are receiving. Only 15% of Millennials not working with a financial professional say that it is due to lack of trust.
Fifthly, it is believed that Millennials think they need a large amount of money in order to be able to work with a financial professional. But, the survey found, 20% think there is no minimum needed, and 60% think they would be able to work with a financial professional if they had $10,000 or less to invest.
The sixth myth is that Millennials gravitate to electronic communication and robo advisers. The truth is that 58% of Millennials prefer to work with a financial professional in person, on par with the 60% of Baby Boomers and 58% of Gen Xers who share that sentiment. Only 16% of Millennials show a strong interest in working with a robo adviser.
Lastly, it is believed that Millennials share the same investing attitudes and behaviors. Urban Millennials are 50% more likely than rural Millennials to own taxable accounts, and 33% of male Millennials are extremely or very confident in their ability to make financial decisions, compared to only 23% of female Millennials. Furthermore, 28% of white Millennials have taxable accounts, compared with 20% of African-American Millennials.
“Millennials are expected to inherit more than $40 trillion in the coming decades,” says Bjorn Forfang, deputy CEO of CFA Institute. “By providing insights into investment preferences and concerns, this research can help financial professionals engage and better serve the needs of the next generation of investors.”