Millennial generation rises in affluence, influence
August 7, 2015
Many millennials are living with their parents, struggling to kick-start their careers and drowning in student loan debt. We hear the stories and news accounts all the time regarding this generation born between 1981 and 1997. There are other millennials, however, already earning more than $100,000 a year, putting their energetic faith into the old-fashioned American dream and remaking how our world operates.
Largest wealth transfer in history
According to a white paper by LinkedIn and market research firm Ipsos published in April, there are 15.5 million affluent millennials with at least $100,000 in investable, non-real-estate assets. Although that number only accounts for about 20 percent of millennials, as Forbes writer Jeff Fromm put it in June, “it’s very apparent that this group is the one fueling millennial trends because of their ability to act on millennial aspirations.”
Every younger generation eventually comes of age and is passed the mantle of influence and power. Millennials are in large part to thank — or blame, depending on how you look at it — for the ways in which the world today shops, consumes, interacts and is entertained. They’re expected to spend $2 trillion in goods and services this year. And they’re beginning to marry, have children and move into leadership positions. It’s worth remembering that this entire generation will one day be on the receiving end of the most massive generational transfer of personal wealth in history: at least $59 trillion, says Boston College’s Center on Wealth and Philanthropy.
As the millennial generation reaches its ascendency, chances are the affluent subset is going to wield even greater influence and power. Let’s take a look at the “financial persona” — the attitudes and opinions about money and the finance industry — of the affluent millennial. It could be a window into the future of the financial industry as it evolves to meet their needs.
The LinkedIn-Ipsos white paper sums up affluent millennials like this:
- They have an ambitious, entrepreneurial spirit
“Affluent millennials have a progressive and optimistic outlook for the future. Their confidence and trust are unparalleled.”
- They want control and guidance in their finances
“… they want to conduct their own research, make their own decisions and execute their own trades. But they also value the insights and guidance of experienced financial advisers … Today, 87 percent of affluent millennials consider finance advisers important, with 37 percent calling them a ‘must-have.’”
- They think outside the box but are loyal too
“Despite being loyal customers, they are open to financial offerings from traditionally non-financial brands.”
- They live and breathe online social networking
“Social networks are a must-have among any financial institutions that want to win over affluent millennials. They are central to the group’s financial decision-making process.”
- They only seek information that’s relevant
“They actively seek out financial content, particularly through their social networks, including customer reviews, expert opinions, educational articles and literature on products and services.”
Finance industry must adapt
As the affluence and influence of millennials grow, we can reasonably expect financial service providers — such as banks, broker-dealers and registered investment advisers — to begin catering to their needs. This might mean that these businesses will provide more information, support and transactions online, perhaps building social networking-esque forums for client-provider and client-client interaction. It might mean that, for some clients, advisers will offer more expert strategy and consulting than trade-making. And it might mean that these businesses become more focused on building trust and credibility and less on marketing and closing a sale.
That’s good news for all of us. Millennials may be leading the way, but all investors will benefit. In fact, I would even say that if you don’t already give your adviser high marks for trust and credibility, then it’s time you looked for another.
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