Complexity is rattling millennials’ financial confidence, study says. This spells opportunity for advisors

While the overwhelming majority of millennials expect to inherit wealth, just over a quarter feel confident making the right decisions as their financial lives get complex, according to a new study from financial services company Equitable.

Plenty of attention has been lavished on baby boomers and their role in the Great Wealth Transfer, although Equitable’s research shines a light on the role that the younger generation is set to play. The study, "Peak 35: Guiding a new generation of wealth," surveyed 500 U.S. adults born between 1981 and 1996. The research notes that, while more than 4 million baby boomers are turning 65 each year, often dubbed the “Peak 65,” an equal number of millennials are turning 35, or the “Peak 35.”

Some 41% of millennials surveyed said they expect to receive an inheritance or have already received one, and an additional 26% say they are fairly certain they will receive one. This means that nearly 70% of millennials expect or are fairly confident they will inherit assets from their families.

Within that number, 71% said they expect cash, while 51% expect to receive personal valuables such as jewelry. Some 46% anticipate inheriting real estate, and 41% expect to receive financial assets such as stocks, bonds and retirement accounts.

However, complexity poses challenges to millennials, according to the study. While nearly 80% of respondents said they feel confident making smart financial decisions today, that confidence level dropped to just 27% when their financial situation becomes more complex. 

This presents a big opportunity for advisors to provide support.

“Millennials stand at a critical financial crossroads as they move into their prime earning years and begin to inherit wealth from their aging baby boomer parents,” said Gerald Grant III, a financial advisor at Equitable Advisors, in a statement. “This historic transfer of wealth is about more than passing down assets, it’s about passing down values.

“Engaging the entire family in honest — and sometimes uncomfortable — conversations lays the foundation for truly lasting relationships,” he added. “Once trust and transparency are established, a holistic financial plan that reflects the family’s goals can take shape and put everyone on the same path forward.”

The study also found that, while millennials are adept as using digital financial tools, many are now seeking personalized financial guidance as they build and inherit wealth. Nearly 70% of millennials said they would prioritize working with a financial advisor over a solely digital experience. Specifically, 27% said they prefer working just with a financial advisor, while 41% prefer a hybrid approach that combines both technology and tailored advice, the study said.

The research is not the first to highlight the financial planning complexity that millennials face. Last year a study from Nationwide Retirement Institute and The Harris Poll said that millennials are feeling the pressures of buying a home and saving for retirement, set against the backdrop of rising housing costs.