In Blog

The financial industry has its eyes on millennial investors, and there’s a good reason for it. Millennials comprise the largest generation in history; they’re already into the wealth-accumulation phase of their lives; and they collectively have the spending power of $1.5 trillion dollars — an amount that will grow, especially as they inherit $30 trillion more. A lot of time is spent talking about millennials and how they live, communicate, work, learn and invest. Financial institutions want to know what sets them apart from the generations that came before them.

There are differences in the way millennials engage with the investing world when compared to their contemporaries. Luckily for financial advisors, millennials aren’t that much different when it comes to money itself. Millennials want comfortable lives, like everyone else. Financial security and investments play roles in achieving those goals. However, there are some differences in the ways they approach the investing process.

Distrust of Institutions

Every generation has significant historical or financial events that shape how people interact with the world and their money. Millennials lived through a number of these events. The 2008 financial crisis, the Bernie Madoff scandal, Occupy Wall Street, student loan debt, retirement savings crises, and high unemployment rates made them wary of large financial institutions. Millennials have lower risk tolerances than their parents and don’t necessarily trust institutions to handle, without their input, complicated money matters such as loan repayments, home financing options, and budgeting strategies.

More traditional financial advisors are used to clients who don’t want details. These are the kinds of advisors who invest clients’ money and send them periodic reports on the results, but not necessarily the investment process itself. While results of the investments matter, millennials investing in their futures want answers and agency in their financial lives, not just reports. They value trust and transparency in financial planning, and that includes important information on how to budget and plan for the future. A good financial advisor offers opportunities for millennial investors to become educated on all aspects of their financial planning.

Money Is Private, but Information Isn’t

Everyone is uncomfortable talking about their money, whether they’re millennials, baby boomers, or Generation Xers. No one likes talking about what they have or don’t have, budgets and other personal money matters. Financial advisors are there for investors who need someplace to voice private concerns about money, which they wouldn’t dream of bringing up with friends or coworkers.

While they don’t want to talk about their money, millennials investing it are much more likely than investors from other generations to talk about how they’re investing that money. Millennials heavily rely on crowdsourcing and communication for recommendations. They have information available at their fingertips that they might not have been taught in school, and are looking for people to verify opinions and offer recommendations. They’ll use whatever information they can find, whether it’s about returns or about what their friends thought, and apply it to their own investing behaviors. Financial advisors who are transparent with information and can be partners to millennial investors, instead of gatekeepers, and have a good chance of earning their business — and the business of any friends looking for advice and opinions.

Millennials Invest With Their Values

Sustainable and impact investing aren’t new fields, but they’ve grown in recent years. There have always been people who have invested according to personal values, but millennials are very mission-driven. They are looking for opportunities to put their skills and resources to work to benefit causes, and want to change the world through their consumption, philanthropy, and investments. Millennials invest in ways similar to how they shop: They look for quality investments that align with their values, which ideally leaves positive impacts on the world. They are concerned about their own financial futures but don’t want to gain wealth at the cost of the world’s future.

For a financial advisor who wants to appeal to millennial investors, it’s important to keep financial as well as social and environmental returns in mind. Advisors need to be mindful of the values of their millennial clients when looking for investment opportunities. Millennials might be expert researchers, but a lot of them need the help of financial advisors with experience in sustainable investments, to help identify the investments that truly address the issues they care about, while offering the best chances at high financial returns. The field is growing, thanks to demand from investors from every generation, which means there will be even more options to research. Savvy financial advisors can help clients find what they need based on their finances, risk tolerance and values, no matter how old or experienced the investors are.

Investing Through Falcons Rock Impact Investments

Millennial investors are like any other group of investors in terms of goals. Investors want to take control of their financial situations and give themselves comfortable and flexible plans for the future. Life doesn’t always go as planned; investors know this and are looking for ways to help plan for secure financial futures, no matter what’s in the past. Millennials are no different from any other investor in this sense, but they’re more likely to scrutinize investment opportunities to make sure they can be trusted to align with financial goals and values.

Millennials are looking for investments they can trust to take their needs and values into account and seek out the information they need to make that possible. Financial advisors have a great opportunity to provide their knowledge of investing to millennial clients by becoming well-versed in impactful investment options. Falcons Rock Impact Investments can help new and experienced investors interested in investing with their consciences and wallets. Learn more about our impact investing process to get started.