Millennials chary of long-term investing

Shell-shocked by market crises, Gen Y holds onto cash, doesn't use advisers, survey says

Jan 27, 2014 @ 5:18 pm

By Mason Braswell

The trauma of the financial crisis is still fresh in the minds of the youngest investors and that makes them hold tight to their cash and dubious about long-term investing.

Many millennials, which UBS defines as being 21 to 36, are as conservative as their grandparents' generation, which experienced the Great Depression, according to a recent UBS survey.

“Millennials are the most worried of all generations,” UBS' report said. “Investors of all generations are most likely to have a moderate risk tolerance. But millennials and World War II generation investors are more likely to describe themselves as truly conservative.”

The survey, which took responses from 4,165 U.S. investors including 1,069 millennials, found that the youngest generation had 52% of its assets in cash, compared with 23% for the other generations. Even older millennials who had at least $100,000 in assets had 42%.

“Clearly this allocation is not just based on cash needs, but reflects wariness about financial markets,” the report said.

The survey results suggested that financial advisers have some work to do.

Only 14% of millennial respondents said that they had consulted a financial adviser on important financial decisions. Most looked to their spouse or partner or parents.

“In seeking out a new advice source, they most value experience, trusting the person, and recommendations from friends and family,” the survey said. “Millennials actually worry more than other generations about getting good advice to help reach their financial goals and knowing if they can trust the advice they receive.”

Only 28% of the millennials surveyed said that long-term investing was key to achieving success, compared with 52% of respondents in other generations. More important, millennial respondents said, was working hard, saving, remembering what is important in life and getting a good education. Paying off debt, increasing savings and buying real estate were the first actions millennials said they would take before investing any additional money they were given.

“Millennials' views on how to achieve success help illuminate their mindsets toward long-term investing,” UBS reported. “With millennials having less faith in long-term investing, they plan to work harder and save more to reach their goals.”

Advisers have a long way to go to win the trust — and the assets — of these most wary investors.

“In seeking out a new advice source, they most value experience, trusting the person, and recommendations from friends and family,” the survey said. “Millennials actually worry more than other generations about getting good advice to help reach their financial goals and knowing if they can trust the advice they receive.”

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Behind the scenes at Pershing Insite 2018

What goes on behind the scenes at one of the industry's biggest conferences? Join us for an all-access sneak peek!

Latest news & opinion

Advisor Group acquires Signator Investors and plans on folding it into Royal Alliance

Advisor Group takes 'orphan' broker-dealer off the hands of John Hancock Financial Services.

It's official: DOL fiduciary rule is dead

The 5th Circuit Court of Appeals issued a mandate Thursday making its March 15 decision to strike down the regulation effective.

Supreme Court curbs SEC administrative law judges

'Buckets of Money' adviser Raymond Lucia is entitled to a new hearing, court rules.

Opaque, outdated 401(k) plan disclosures harming investors, advisers

Morningstar report: Lack of data on fees, investments makes advice on rollovers costlier and more challenging for investors.

Mutual funds feel the pinch of platform fees

No-transaction-fee options are a big hit with investors, but funds wind up paying the costs — and passing them on.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print