Move over baby boomers. Your adult offspring are beginning to come into focus as a primary concern for financial services firms. While the kids may be alright, they’re nothing like you. For one thing, they aren’t counting on a massive generational wealth transfer the way boomers have — in vain, for many — for so long.
The millennial generation consists of some 80 million twentysomethings, a demographic even larger than the storied boomer generation. These young adults have come of age, financially speaking, and while banks have largely ignored them in the past, that’s changing.
Millennials, also known as Gen Y, have a vastly different take on the money world, according to a new survey by consulting firm Accenture. They are more conservative, less trusting, and far more reliant on digital tools including social media to solve financial conundrums.
The Great Recession seems to have made a deep impression on this group, even though its members had relatively few assets at risk during the meltdown. Apparently, watching Mom and Dad struggle was lesson enough. Among the three generations that span ages 21 and 67, Millennials are most likely to say they are conservative with their money—43%, vs. 31% for boomers and 27% for Gen X.
Millennials are also most likely to “stay with what is tried and true” and “never take the advice of my financial adviser without first consulting another source.” They crave financial education—44% say they are extremely interested in learning more about investing, more than both boomers and Gen Xers. Perhaps most interesting, 40% of Millennials say they are committed to passing wealth along to their family, compared to just 21% of boomers and 30% of Gen X.
“Growing up, millennials have witnessed many boom and bust cycles – the dot-com bubble burst, mortgage crisis, two stock market crashes,” Alex Pigliucci, Global Managing Director of Accenture Wealth and Asset Management Services, said in an email. “They have yet to experience a long-lasting bull market, and all of this volatility has made them exceedingly skeptical of fast money and fast returns.”
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As you might expect, this group is also far more insistent that the web be a big part of their financial life, which further sets them apart from boomers and may pose the biggest challenge to banking institutions, which by and large are set up to chase the biggest slice of the money pie represented by retiring boomers. Accenture reports that online options most attractive to Millennials are:
- Online communities where investors interact with each other and financial professionals,
- Online video series,
- Online seminars and webinars,
- Virtual meetings with advisers,
- Investor-led online education, and
- Connecting via social media.
Such features matter little to boomers and point up the degree to which banks will have to evolve their services. “The banks that will be successful today and in the future will be the ones that know their customers best and provide the best customer experience when, where, and how the customer wants to interact,” said Pigliucci.
Accenture estimates that $30 trillion will pass from boomers to Millennials over the next 30 years, giving financial firms plenty incentive to court the kids. This transfer may or may not come to pass.
At one time, Boomers were expected to benefit from a similar wealth transfer—some $41 trillion at the time of this writing. Then reality happened; incomes stagnated, people lost their jobs, and for buy-and-hold investors the stock market has been dead money for 13 years. More recent estimates put the boomer inheritance at $11.6 trillion.
This too the kids have seen, which may help explain why compared to boomers they are more risk averse, less trusting and crave a more thorough understanding of how the money world works. The kids are alright, and they want to stay that way.