Millennials Trust Mom and Dad for Financial Advice

Before advisers or financial institutions, Millennials turn to their parents and friends for financial information.

A study released by Microsoft Corp. found that 81% of adults age 18 to 29 trust their parents for advice concerning financial planning, followed by their friends (71%), financial advisers or planners (66%), and financial institutions, such as banks (64%) (see “The Young and Restless”).

However, most (75%) also said they are unsure about where to turn for reliable financial advice (28% strongly agree).

Cautious about Saving

It looks like financial firms will need to work to rebuild the trust of Millennials, who are tentative about saving and investing. Only about half (51%) of respondents reported that they are likely to invest money into 401(k)s or other retirement plans. A larger percentage (67%) said they are likely to invest in the stock market. Only 22% plan to invest money into a bank.

However, the overwhelming majority of surveyed young adults are concerned about their financial future (85%). They also show concern about the future of financial institutions; 82% say they are concerned that more financial institutions will continue to fail in the future.

Millennials are split as to whether financial firms are in touch with younger generations (50% said yes). Slightly more than half (52%) agreed that the U.S. financial services industry is trustworthy.

What are some ways Millennials said financial institutions can regain their trust? The most important is admitting mistakes when they happen (92% said it is somewhat or very important). The generation would also like to see financial institutions: creating simpler and clearer materials explaining financial risks (89%); being more open and transparent by sharing free information (86%); getting rid of large bonuses until the U.S. economy improvise (82%); allowing more regulation involving third parties, government officials, and more (74%); creating online blogs where they can pose questions and get answers (68%); and creating open dialogue using social networking (59%).

Many Millennials also reported that electronic communication is helpful from their financial institutions, especially monthly e-mails (75%); online chats with customer service representatives (67%); and a personal Web portal with account information (64%). More than half (51%) said streaming Webcasts by financial experts would be helpful.

“The financial crisis has created a deep sense of mistrust in Millennials, which is keeping the next generation of wealth on the sidelines,” said Colleen Healy, general manager of U.S. Financial Services at Microsoft. “However, this survey points to technology as a solution for financial services firms seeking to rebuild trust and build lasting relationships with this group.”

The survey was conducted online by KRC Research in August. The full results “Millennials in Financial Services” survey are available here.