June 28, 2018 | Article

When studying trends in millennial investing, one has to consider the financial environment in which many millennials grew up. Some watched their families lose out on investments during the stock market crash and financial crisis of 2008, while others have become part of what is now known as the “gig economy,” which describes the group of people working temporary and freelance jobs. Therefore, many people in their late 20s and early 30s don’t have employer-sponsored retirement plans. With that being said, the way millennials tend to invest reflects the experience they’ve lived through.

One of the main trends of millennial investing is that they are generally more cautious when it comes to how they choose to invest their wealth. In 2015, a study showed that this generation tracks their spending and expenses more carefully than some others, with 75% saying that they’re tracking in order to create a budget. It’s no surprise that their thriftiness carries into their investing activities as well.

Many millennials also turn to technology, which shaves down the overhead in investing by a significant amount. Trends have shown they’re becoming less reliant on personal financial advisors and are leaning toward using robo-advisors, which are automated platforms that use algorithms to pick an ideal asset allocation for the potential investor.

Not to mention, studies have also shown that millennials, in particular, have more diversified portfolios. It’s been noted that millennials have been favoring precious metals and real estate as alternative investments to supplement their portfolio.

As mentioned in our multi-generational investing article, it’s important to form connections with your clients’ families. So, when they ultimately inherit their parents’ legacy, you as an advisor will have a foundation of a relationship to build off of. That could decrease the chances of the money you’re currently helping to manage from being moved away.

The conclusion we’ve drawn is that while millennials may not have the most traditional ways of investing, they are interested in ways to make smart financial decisions in order to plan for a comfortable retirement. Nevertheless, they currently are and will continue to be a large demographic that seek out information and advice on investing. Start reaching out to the younger generation to begin forming bonds that could help grow your business!

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