As wealth ownership in the U.S. shifts to millennial and Generation X investors, it is incumbent on financial advisors and providers to understand how these investors want to engage with financial professionals and comprehend their attitudes and preferences regarding financial matters.
In a new report, Spectrem Group lays out key differences between millennial and Gen X investors and highlights some of the unique characteristics of investors in each generation.
Millennials have different attitudes than Gen X investors toward wealth accumulation and about how they feel about the wealth they have accumulated.
Spectrem fielded the research over the summer among 601 millennials and Gen Xers, all of whom had at least $100,000 in net worth, not including their primary residence, and were the household financial decision-maker or shared jointly in making household financial decisions.
Millennials vs. Gen Xers
The research showed that millennials value hard work and are proud of their wealth because they feel they earned it. At the same time, they are uneasy about their success.
Millennials in the study were nearly twice as likely as Gen Xers to feel guilty about their wealth. Spectrem noted a likely reason for this: 76% of millennials considered wealth inequality in the U.S. a major problem, compared with 57% of Gen Xers.
This belief, in turn, may affect how they invest, leading to choices influenced by social and political inspirations and not just prudent financial guidelines.
Unlike Gen Xers and older generations, most millennials in the study reported that their parents had worked with a financial advisor. While they are comfortable with the idea of using a financial advisor, their expectations of the services they are paying for differ from those of their older cohorts.
Eighty-two percent of millennials said they use an advisor to assist them in making financial decisions, compared with 65% of Gen Xers. The types of advisors they seek out are different from older investors. Millennials consider a banker or an accountant their primary advisor, whereas Gen X investors are more likely to use independent financial planners, full-service brokers and investment managers as their primary advisor.
