As already noted, Millennials don’t have much in the way of investable assets. When the youngest Millennials graduated from college in 2017, student debt averaged $37,000.1 No wonder so many members of this generation are still living with their parents and renting as opposed to owning.
Interestingly, Millennials are often tagged as lazy with their money for paying more for products and services that line up with their values. It’s a misleading label at best and fails to capture what is really going on which is that Millennials are savers (but not necessarily investors), and for good reason. They’ve witnessed the Great Recession and have a mutually distrustful employment relationship with Corporate America. They’ve experienced downsizing and flat wages, and generally expect to be in a job for only a few years before moving on. Is this about the money? Sometimes, but it is often for culture or social justice reasons. The point is that between debt and sometimes self-imposed job uncertainty, saving is more important than investing. More affluent Millennials tend to buy individual stocks of companies they endorse (respect), and more often than not these are tech stocks such as Apple, Netflix, and Amazon.
In a piece last year in U.S. News & World Report, Lou Carlozo cites AARP statistics that indicate Americans over 50 hold 80% of household wealth.2 This suggests $30 trillion will soon pass from Baby Boomers to Millennials. As it does it will have profound effects on many parts of our economy, and significantly, the financial services industry. This is a key point, as Millennials have an uneasy relationship with financial services companies. For one thing, they lived through the 2008 financial crisis and saw first-hand how excessive greed on Wall Street decimated jobs and wealth on Main Street. In a nutshell they don’t trust big banks and investment houses, and Wells Fargo repeatedly proves to them their wisdom in this regard.
Secondly, and as outlined throughout this book, technology is their friend. They believe in their abilities to learn (ideally visually) without help from anyone. Especially financial advisors. Does this mean there isn’t a role for financial services firms? Of course not, as we are one tech crash away from some important life lessons for Millennial investors. But it does mean that financial firms need to embrace consumer-facing technology, combine the user experience of a robo-advisor with hands-on responsiveness of relationship managers, and deliver it all on a smart phone.
We know Millennials are passionate about social justice, and demand that corporations align with their own values. We’ve also established that this generation is up against a wall of debt and a host of climate-related challenges that represent existential threats to their lives and especially those of their children. Interestingly, the generation that lived through the Great Depression and fought in World War II most closely represents Millennials in many ways. (The Great Depression v. The Great Recession) and, (Nazi Germany and Imperial Japan v. climate risk and geo-political threats.) Just as their grandparents did before them, they will rise to these challenges without losing their core values, and as they acquire wealth, they will put this wealth to good use.
1 Friedman, Zack. “Student Loan Debt In 2017: A $1.3 Trillion Crisis.” Forbes, Forbes Magazine, 28 Mar. 2018.
2 “The Longevity Economy.” AARP, 1 Sept. 2016.