Millennials Want to Beat the Markets More Than You Do
It’s such a priority for younger clients that they’re often more likely to switch advisors after major life events.
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Millennials have been called everything from lazy to a bunch of freeloaders. When it comes to their investing habits, that might actually be true.
Those who grew up on snacks like Dunkaroos and the Dawson’s Creek TV series tend to prioritize alpha more than other generations, and that makes beating market benchmarks a top priority, according to a new survey from tech firm Orion. It’s so important to millennial clients that they would actually switch advisors to help generate returns. “That’s where most people start in the investing world,” Reed Colley, Orion president of technology, told The Daily Upside: “‘I want to make money, and I want to make more money.’”
While advisors may have boomers in the bag, they’re going to have to focus on building relationships with the new generations to stay competitive.
It’s Not You, It’s Me
The good news is that clients really do like their advisors. Of the investors Orion surveyed, 95% said they were satisfied with their advisors and trusted they worked in their best interest. However, when you break that down by age, younger investors ache for better returns. Just 55% of millennials said they were satisfied with their advisors. Throw in a marriage, some kids, or a large inheritance, and those younger clients have more reason to start heading for the exit. The survey found:
- 38% of millennials say beating the market is “extremely important,” compared with 35% for Gen X investors and just 22% for boomers.
- Millennials are also the most likely to switch advisors after a major life event, with 37% saying they would leave if they inherited more than $1 million and 19% ready to make the change after a divorce.
You’ve Got Mail. Communication is a key, yet tricky, part of retaining younger investors. Millennials have a preference for emails and online messages, the survey found, and 96% of advisors said they plan on using digital channels more in the next three years. However, important information can get easily lost in inboxes, and oftentimes clients aren’t aware of all the services their advisors offer, like estate planning and insurance advice, according to the survey.
“It’s hard to get your clients’ attention,” Colley said. “COVID fundamentally changed how you meet with clients, and that window of time has narrowed.”
