Through a press release, the American Psychological Association stated that one common stress among all generations is financial concerns. They further revealed that while 85% of millennials cite money and job satiability as significant causes of stress, only 71% of the older generation views these factors as sources of stress.
As a result, millennials seem to have different financial management factors compared to the older generation, as discussed below.
Technology and Online Platforms Are Important Sources Of Advice
In a report titled, Millennials and Wealth Management Trends and Challenges of the New Clientele, Deloitte stated that the past financial crisis and the volatility of the financial markets have made generation Y very cautions and conservative with regard to financial management.
Compared to older generations, this generation ensures that it does adequate research before settling on any financial option.
Millennials heavily rely on technology for financial advice and subsequent decision making. As a matter of fact, the report showed that up to 57% of millennials would trade their bank relationship for better technological solutions- a trend that is not seen with older generations.
The Deloitte report also showed that generation Y makes fewer financial risks compared to older generations.
While generation X have deeply invested in stocks, less than 30% of millennials have chosen a similar path. They mostly prefer physical assets and cash, consequently demanding only clear, simple and straightforward financial solutions.
The older generation have been trusting the government and financial institutions with their retirement benefits, a trend that generation Y finds rather too risky.
As a matter of fact, 51% of millennials do not trust the social security systems for their retirement needs and instead look for other tangible options that banks are rolling out. Notably though, they still believe in retirement savings and actually save at least 13 years earlier than baby boomers for their retirement.
They Don’t Make Financial Decisions Alone
The older generation completely trust their financial advisers and act without second thoughts. Millennials on the other hand, seek classical investment advice and greatly consult their peers and the media before implementing their advisers’ recommendations. Actually, only 10% of them make financial decisions without the input of media and peers.
They Are Self-Directed In their Investments
Generation Y is self-directed, posing to be more of a challenge to deal with than older generations. Millennials assume that they understand the markets and are well conversant with different products and trends.
Contrastingly, and rather interestingly, 84% seek investment advice, indicating that they are indeed they in need of world class advice even more than the older generation.
A Pew Research Center’s study showed that only 26% of millennials are married. This is a lower rate compared to older generations (36% of generation X and 65% of the silent generation) when they were at a similar age bracket as today’s millennials.
The study suggested that the late marriage trend was a way of millennials managing their finances, since higher education and better careers promise greater financial security in marriage. Therefore, they take longer periods in school securing their future.
Millennials with lower levels of education and income strongly stated that they believed that they lacked an essential prerequisite for a strong marriage.
Due to these observable differences, the current investment trends are increasingly turning out to be different compared to the past. As a matter of fact, the entire world has been affected, with current economic forces shifting from the previously dominant factors.
Ken is a finance expert with a degree in finance. He loves pizza, especially Chicago deep-dish from Lou Malnati's!