A major global investment survey of Millennials, individuals aged 18-34, has proven this generation to be conservative when it comes to saving for the future and investing their hard earned cash. The largest asset in the average Millennial’s allocation in 2016 is cash savings. With this in mind, it’s no surprise that there is such a land grab by banks and building societies to incentivise this generation to become customers.
The Millennial’s attitude to investment and risk can only be a direct response to their life experience. Instead of coming of age in the 1980s when risky investments could be rewarded handsomely, the Millennial’s first experiences of the stock market is likely to have been steeped in gloom and negativity. This will have been largely driven by economic factors such as the impact of the Dot-com bubble bursting in 2000 and the credit crunch of 2007. Experience of successive financial crises would have defined a whole generation of individuals as being unable to stomach large swings in the value of investment portfolios and perhaps even a fear and avoidance of the stock market and financial matters altogether.
Losing large amounts of cash in a market decline is likely to scar an investor for life. More work needs to be done to shift attitudes towards investment of this highly influential generation, particularly when latest figures estimate that by 2020 Millennials will be the largest generation to have ever existed. At this point the aggregated net worth of Millennials across Europe and the US is expected to reach £13trillion.
Millennials are the driving force of tomorrow’s economy, and the financial services sector needs to look way beyond how much their existing clients have saved into their pension pots, because If the financial services sector is unable to win over the Millennials and satisfy the needs of the next generation, it is likely that their businesses will be in desperate trouble ten years from now.
Realistic and achievable investment success stories need to be championed in order to install a confidence in investment and long term financial planning attitudes. It is this which will shift their approach towards saving for the future and to personal finance overall. Millennials need to understand that by prioritising short-term spending over long-term saving, they may well be storing up problems for their own future.
One of the largest generations in history is moving into its prime spending years and the financial services sector must adapt to capture this next generation of potential savers and investors.