A global study found 40% of millennials are turning to advisors while only 7% use automated advice.
There are many misconceptions about millennials, such as being obsessed with avocado toast and social media. However, a new report shows that as they marry, advance in their careers, and build wealth, millennials are choosing financial professionals over robo-advisors.
According to a Natixis Investment Managers’ global study, 40% of millennials seek advisors for financial decision-making, while only 7% rely on automated advice from robo-advisors and algorithms.
Additionally, nine out of ten millennials trust their advisors for reliable information, compared to less than one-quarter who trust social media.
In North America, more millennials have advisors: 72%, which is higher than the 66% of Gen X and 70% of baby boomers, the study found.
“The preference for personal advice may be due to the life stage of millennials. Many marry later in life, and half of those surveyed have multiple sources of income,” the report stated.
Natixis found that the North American group is most interested in financial planning, with many being diligent savers planning for early retirement.
Globally, millennials think about risk differently than advisors. For example, 14% of millennials consider risk as “underperforming the market,” while only 7% of advisors share this view. Also, 11% of millennials see risk as “not meeting my goals,” compared to 24% of advisors.
Like advisors, millennials list their top risks as exposure to volatility (24%) and losing wealth (22%).
“Millennials began investing when passive investments like index funds became popular due to their promise of market returns at lower fees,” the report said.
After a decade of strong markets, millennials expect returns of 16.3% above inflation.
“Given these expectations, they may be overexposed to portfolio risk and surprised when markets become volatile,” it stated.
Millennials are also interested in ESG investing, but 41% noted they need more information before committing.
Overall, 78% see investing as a way to make an impact, and 63% believe they have a responsibility to use their investments to help address societal issues. Additionally, 36% ask their advisors to avoid investing in companies that conflict with their personal values.
As the oldest millennials approach middle age, retirement becomes a higher priority. More than three in four said they are responsible for funding their own retirement, while almost half believe they’ll never have enough money to retire.
This concern is shared even among the wealthiest millennials with more than $2 million in assets: 48% of this high-net-worth group said “it’ll take a miracle” to retire securely.
Natixis surveyed 8,550 investors with at least $100,000 in investable assets across 24 countries from March to April 2021; 2,459 respondents were millennials, with 275 in North America. CoreData Research conducted the online survey.
