7 Important Ways Millennials Approach Financial Advice Differently

Gen Y, also known as “Millennials,” were born between 1981 and 1996, ranging in age from their late twenties to early forties today. 

Despite many objective challenges, Millennials are increasingly establishing themselves in the workplace, which means their earnings are increasingly likely to allow more than a hand-to-mouth existence.

With their earnings increasingly established, Gen Y’s differences must be accommodated by financial advice sources.

How Millennials Use Financial Advice

According to a report from the Financial Planning Standards Board, there are the 7 main differences identified for Gen Y’s use of and needs from financial advice.

The report’s methodology is described as follows: “This quantitative study was undertaken in February 2023 and involved an online survey of 15,322 respondents from 15 territories, including Australia, Canada, Chinese Taipei, Hong Kong, India, Ireland, Malaysia, The Netherlands, New Zealand, People’s Republic of China, Republic of Korea, Singapore, South Africa, United Kingdom and United States. Each respondent was over 25 years of age, earning over US$60,000 equivalent p.a. or holding over US$35,000 equivalent in investable assets. The sample included both advised and unadvised consumers.”

Here are those differences…

1. Digital Natives Are More Comfortable with Online Resources and Apps

Known also as “digital natives,” Gen Y is generally more comfortable with the Internet, apps, and especially social media compared to older generations. As many as 3 in 4 Millennials looking for financial help use online resources and apps.

This difference is especially important when it comes to consuming and using financial advice. The report finds that 2 in 5 Millennials use budgeting apps vs. just 1 in 3 Baby Boomers, and more than 2 in 5 expect to have access to an online portal vs. 1 in 3 Boomers.

Anthony Ferraiolo, Partner Advisor of AdvicePeriod shares, “I’ve noticed Millennials are much more willing to try things they see online. Specifically, many bring me ideas from Instagram or TikTok because they’re marketed these ideas or told they’re missing out. Many Millennials find it normal to open an account and buy stock within seconds. I’ve seen this add unnecessary risk to people’s financial situation. They may hold too much company stock or make investing decisions without due diligence. My role, whether with Gen Y or older clients, is to ensure they take the necessary steps to meet their desired outcomes while ignoring the noise.”

2. Gen Y Can’t Be Pinned Down as Single-Channel Customers

Despite their digital fluency, the majority of Gen Y (3 in 5) also want access to their financial advisors through face-to-face interaction.

3. Direct Online Investing? Yes, Please

As many as 7 in 10 Millennials have been engaging in direct online investing from before the COVID-19 pandemic (2 in 5), since 2020 (2 in 5), or would consider doing it now (3 in 10). For Boomers, that number is a scant 1 in 4.

4. Non-Traditional? Sounds Good

While over half (54%) of Boomers wouldn’t even consider investing in cryptocurrencies, only 25% of Gen Y say the same. In fact, 3 in 10 already have some money invested in crypto, and another 1 in 4 would consider it.

5. Profit? Yes, but with a Purpose

Boomers have become known for socially conscious investing, with as many as 76% preferring to invest in companies that support a purpose beyond profit (or naked greed, as some would say). However, this is even more important to Gen Y, with 81% saying they prefer such investments.

6. Financial Planning Has a Wider Importance than Just Financial

Millennials are more likely than older generations to expect to see wider benefits from receiving financial advice than just financial. Some areas identified as benefiting include:

• Mental health
• Family life
• Work satisfaction
• Social life
• Physical health

7. More Open to Paying for Financial Advice

While many may believe that Gen Y relies on so-called-expert social media influencers, or “finfluencers,” for financial advice, as they get older, Millennials have gained healthy skepticism and increasingly filter what’s available online to find knowledgeable and reputable sources (if they want to go the DIY route) or pay for professional financial advice.

Perhaps surprisingly, 2 in 3 Millennials who don’t already have an advisor would be open to hiring one (especially if the advisor pays attention to their unique needs and preferences). That number is lower for Gen X (3 in 5) and even more so for Boomers (1 in 2).

Brian Sokolowski, CFA, Managing Partner and CIO at Bluebird Wealth Management points out, “Gen Y tends to prioritize experiences, like travel or entrepreneurship, and seek financial advice that aligns with these goals. Older generations often focus more on retirement planning or wealth preservation. Also, Gen Y, having witnessed economic crises like the 2008 financial downturn, might be more skeptical of traditional financial institutions. They often seek advisors who align with their values and demonstrate transparency in their services.”

The Bottom Line

With more and more of Gen Y having an established income, and more than half of them having already received or expecting an inheritance or major financial support (nearly 4 in 10 of those said they expect this “money infusion” to be over $250k!), it’s past time that financial advisors pivot their attention to this up-and-coming financial cohort.

Omar Morillo, Founder of Imperio Wealth Advisors, www.imperiowa.com, for example, says, “As a CFP working with Millennials and myself a Millennial, I understand their inclination toward financial planning and investment advice requiring a multi-faceted approach, with personalization being the top priority. While there’s a reasonable probability that Millennial entrepreneurs will pay for financial planning and investment advice, the likelihood depends on various factors, including their personal financial situation, values, and how they perceive the value offered by such services. This is why we focus on personalized, tech-enabled, and ethically aligned services to better align our offerings to our peer demographic’s needs.”

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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.