Millennials: Young adults could become next generation of dominant investors

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focus-raining-moneyLeading-edge Millennials now have become young adults in their early 30s.

They are starting their careers and families. And there are a lot of them — 76 million.

As the Baby Boomers transition from wealth accumulators to wealth distributors, Millennials — those born between 1981 and 2000 — already are being described in financial circles as the next generation of dominant investors.

“When you look at the Millennials, their biggest asset is their potential — it’s their lifetime potential to earn,” said Jake Kuebler, certified financial planner who himself is a Millennial. At age 26, he is partner in an Illinois-based financial planning firm and recently was on a panel for the Alliance of Cambridge Advisors to discuss how Millennials will change the financial planning landscape.

This generation has an advantage over the Boomers — Millennials have access to lots of financial information on the Internet. That makes them slightly more cynical, and even savvier, than Boomers — who didn’t have the Internet in their formative years — when it comes to finances.

Millennials will likely be smarter investors, more knowledgeable about finances and live within their means.

But they don’t want to be lectured to about money.

“Millennials are less focused on, when you talk about career development, maximizing pay — and they are more interested in maximizing lifestyle balance,” Kuebler said.

All of these qualities make Millennials the talk of the town in financial planners’ circles, Kuebler said.

What do they like? What do they need? How can financial planners capture them as clients?

Coming of age

Millennials are coming into adulthood in a difficult job market and poor economy.

They won’t have the pensions their grandparents and parents had. They may not be guaranteed Social Security, which was created in 1935 when the life expectancy was age 65.

Today’s oldest Baby Boomers, who began reaching age 65 in 2011, on average, will live another 18 years.

“I think Millennials will say, ‘I need to take care of myself. My parents had Social Security. I won’t have it,’ ” said Linda Leitz, certified financial planner with It’s Not Just Money. Leitz hosts webinars called “Grown Up Money” for Millennials interested in financial planning.

Millennials, she said, have watched their parents and grandparents struggle since the economy took a turn downward in 2009. They don’t want to get in over their heads in debt, she said.

“They will be less likely to spend every dime they make,” Leitz said.

Because they grew up with the Internet, Millennials are not afraid to seek out information and make their own financial decisions. The stock market is not the mystery it was to their parents and grandparents. And the younger adults also are quite chatty about their finances.

“My parents grew up in the Depression, you never talked about money,” Leitz said. “I think Millennials are more likely to seek out information.”

A 2011 annual investor survey by TD Ameritrade found that Millennials are taking on financial responsibility at an earlier age than their predecessors and they are willing to talk about financial issues: 62 percent of Millennials between ages 22 and 34 said they turn to friends, relatives and colleagues to stay informed about news and events shaping the economy and financial markets, compared to 43 percent of Boomers who felt the same.

Millennials are more optimistic about their investments than Boomers, and 85 percent of them expect their portfolios to make gains in 2012. Despite the stagnant economy, they are willing to invest now.

Their dilemma might be too much information, Leitz said. They will have to weigh their online research against individual advice from a trusted source.

“I would say to them, stay with something you know over something that sounds fabulous,” she said.

Any time people are intent on a “do it yourself” approach, there is a chance they will find answers that are not right for them, she said.

“There is a wealth of information, and if they can parse through it, they should be confident,” Leitz said.

Young, but influential

Millennials may grow up to be the wealthiest generation in history. But right now they still are paying off college loans, said Jane Young, a certified financial planner also with It’s Not Just Money.

That means financial planners are changing their game plan, she said.

They aren’t just crunching numbers for clients. They are looking at their whole life situation. And they are willing to work with younger clients on basics, like setting a budget and creating a savings account.

“There is a big push to educate young people,” Young said. “I see a lot of programs like webinars offering, for example, a series of five sessions and dramatically reduced rates — I am seeing an effort to reach these folks.”

Millennials will be savers, she said. They already are creating their emergency three-month savings, paying off credit cards and investing in the company 401k.

“I think they will make smarter decisions,” Young said. “I’m hopeful that they will be more aware of the dangers of getting in over their head with a mortgage that is too expensive.”

Millennials already have changed the financial planning landscape, Kuebler said. The National Association for Personal Financial Advisors recently launched a program called Genesis, a scholarship program aimed at helping young adults become certified financial planners.

Millennials want to talk to Millennials.

“They want to relate to their adviser,” he said. “Part of that is you want to work with someone who will be there through the years when you make those transitions.”

Millennials vs. Boomers

  • Millennials were born between 1981 and 2000.
  • Boomers were born between 1946 and 1964.
  • 51 percent of Millennials are comfortable making investment decisions on their own, compared to 37 percent of Boomers.
  • 62 percent turn to friends, relatives and colleagues to stay informed about the economy and financial news, compared to 43 percent of Boomers.
  • 33 percent agree that this is the best time to invest despite the economy, compared to 12 percent of Boomers.
  • 25 percent contribute to both an IRA and an employer-sponsored plan like a 401k, compared to 16 percent of Boomers.

Sources: TD Ameritrade survey and

One Response to Millennials: Young adults could become next generation of dominant investors

  1. The youngest Millennials are still in junior high and high school and college.

    Gen Xers are the largest U.S. generational population. They’re born between the years 1961 – 1981. The total U.S. Gen X population is approx. 93,000,000 people. See New York Times bestselling book titled “Generations” by experts Strauss and Howe (page 318).

    H&S project the Millennials, born 1982 – 2004, at 76,000,000 people in the U.S. (updated to approx 90-95m) — see page 336

    Baby Boomers, born 1943 – 1960, are estimated at 79,000,000 people in the U.S. — see page 300 (see U.S. Census for updated number)

    The “Silent” generation, born 1925 – 1942, is at 49,000,000 people in the U.S. — see page 280

    March 19, 2013 at 2:58 pm