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Demographics & Culture
High net worth millennials: Savvy with high expectations
Mike Van Wyk
Head of Customer Research and Insights
October 28, 2018

How well do you know your high net worth Millennial clients?


Mike Van Wyk, Capital Group’s vice president of Customer Research & Insights, shared new research on the unique generational needs of high net worth Millennials. During his presentation, titled "Millennials to Boomers: Better high net worth planning by generation,” Van Wyk revealed data on Millennials and corresponding actions advisors might consider to serve them best.


Snapshot

  • Only 51% of Millennials actually think they are Millennials 
  • Two-thirds think they are unique 
  • Millennials mainly think they are unique because of their use of technology and their music 
  • Seven out of 10 Millennials think understanding investments is extremely important 

They are… 


Preparing for the future

  • 83% want to own a home 
  • 72% say it is personally important to be a parent 
  • 68% say it is personally important to be married 
  • 85% think a long-term financial plan is important 
  • 83% claim to have a budget 
  • 58% say they are conservative investors 
  • 56% claim to have a financial advisor 
  • 53% trust financial services and 70% trust financial advisors 
  • They expect 16% annual returns from now until retirement 


Millennials: Savvy but cautious




Millennial persona: Life is happening fast.


Millennials send advisors a conflicted message. Members of this generation are savvy — 85% know that having a long-term financial plan is important. But they’re also open to financial help and guidance: 70% of Millennials say they trust financial advisors and almost half say they currently consult a financial advisor.


But here’s the challenge. Millennials have very high returns expectations despite being financially conservative. Scarred by the financial crisis, Millennials are fearful about volatility but still think they can earn 16% average annual returns until retirement. Now is a crucial time for them because they are experiencing a series of life events like marriage, the birth of a child and buying a house. These events are financially and emotionally challenging and have long-term financial impact. What Millennials need is “real-life” guidance.

Millennial action plan for advisors: Be relevant.


Understand their stage in life. Millennials are undergoing a number of critical life events — ranging from home buying to the birth of their children — and they do want your help. Their trust for the financial services industry is twice as high as any other generation, and 70% of them find financial advisors to be credible and trustworthy.


Provide “real-life” guidance. While Millennials do trust financial advisors, they may not be confident that they are the type of clients that financial advisors want. Connecting with them becomes much easier when you focus on the defining life events they experience each year. This has the dual benefit of making the conversation more personal while also making it very practical.


Stay connected during future real-life events. Keep in mind that Millennials are 13 times more likely to move money during a financial life event. If you aren’t consistently present at these life events, you may find yourself losing them as clients.

Erik Morgan, Senior Partner at Freestone Capital Management

Video


Schwab Impact Millennials

Erik Morgan:

I think the observation is spot on as it relates to their views on risk, um, they are very risk adverse, in their words, in their thinking. Often times their actions from an investment perspective are very different than that. They are concentrated in the companies that they know or willing to take risks on the new technologies that they believe to be the new, new deals. So, I think there is a disconnect between what they say and then what they end up doing in many cases.

So, in our interactions with the millennials what we spend a lot of time doing is talking about what their experience in investment has been and for most of them that has been post 2008 and '09. And so, they've had nothing but great markets to experience. We then contrast that with remember that little moment in time that your parents went through or maybe you did but you didn't have any money, those things happen. In fact, they happened in 2000 to 2002. They happened in '87; they happened the entire decade of the 70s.

So, these return expectations of 16% they've made a lot of sense when the markets run from very low to very high. Like it has over the last 10 years um, those um, um, markets generally don't last that long.

 


Erik Morgan, Senior Partner at Freestone Capital Management, discusses his firm’s experiences working with Millennial clients.

More in this series about HNW generations


High net worth Gen Xers: “Do-it-yourself” generation


High net worth Boomers: Settling into retirement

HNW generations: By the numbers


An at-a-glance look at data that define your clients’ generations


DOWNLOAD


HNW generations: Action plan


Enhance your effectiveness as an advisor by understanding your clients’ generation


DOWNLOAD

More about high net worth:


3 secrets of high net worth clients revealed


High net worth will soon look very different


Survey: What high net worth clients want



Sources


Capital Group Advisor Generational Attitudes Study, September 2018


Capital Group Investor Generational Attitudes Study, August 2018


Capital Group Wisdom of Experience Survey, December 2017


McKinsey Money in Motion Survey, 2016


 


Mike Van Wyk is a senior market research manager at Capital Group, home of American Funds. He has 25 years of industry experience and has been with Capital Group for seven years as of December 31, 2022. Prior to joining Capital, Mike was director of global strategy development and advanced research methods at Procter & Gamble. He holds an MBA from the University of Texas at Austin and a bachelor's degree in horticulture from Michigan State University. Mike is based in Los Angeles.

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