FINRA’s 7 Myths About Millennials and Money

(401k Specialist) Millennials now account for more of the workforce than any other generation. With paychecks to spend and responsibilities piling up, they’re making money moves, but (in true Millennial fashion) doing it their own way.

Study after study have shown assumptions serve no purpose when it comes to the cohort. Sure, the youth love tech; yet, research shows they want a human guidance when it comes to financial matters. Society would have you believe they’re all bursting with confidence; however, data show they’re intimidated and uniformed about investing.

The CFA Institute and FINRA Investor Education Foundation recently took their turn surveying the youth, aiming to better understand the cohort’s unconventional attitudes and behaviors about money.

Myth 1: Millennials have lofty financial goals.

Reality: Investors and non-investors among the bunch expect to retire at the standard age: 65. Those who aren’t investing have very modest financial goals and are focused on surviving month-to-month. In contrast, the financial goals of younger workers with taxable accounts mirror those of Gen Xers and Baby Boomers. One such ambition: “saving enough to retire when I want and live comfortably.”

Myth 2: Income and debt are the key barriers to investing.

Reality: Yes, they factor in, but in line with prior research, 39 percent of Millennials without taxable investment accounts say lacking knowledge is also a substantial barrier.

Myth 3: Millennials are overconfident in general, so they are probably overconfident about investing.

Reality: Again, echoing previous data, only 21 percent of non-investors and young workers with only retirement accounts are very or extremely confident about making investment decisions. This figure increases to 47 percent for those with taxable accounts.

Myth 4: Millennials are skeptical of the financial services industry and by extension, financial professionals.

Reality: Nope. Instead they acknowledge and respect the expertise professionals can provide. Nearly three quarters who are working with a financial professional are very or extremely satisfied with it. A mere 15 percent of those who aren’t working with a financial professional say it’s due to lack of trust.

Myth 5: Millennials overestimate the investable assets needed to work with financial professionals.

Reality: In truth, they underestimate the investable assets needed to work with a typical professional. Twenty percent believe there is no minimum amount necessary, while six in 10 believe a financial professional would work with them if they had $10,000 or less.

Millennials also lack guideposts for pricing financial advice. Forty-two percent are clueless about what financial professionals charge. When asked to estimate, they guess high: 77 percent believe it’s a fee of 5 percent or more of assets under management.

Myth 6: Millennials gravitate toward electronic communication and robo-advisors.

Reality: Sure don’t. Over half (58 percent) prefer to work face to face with a professional, on par with Gen Xers (also 58 percent) and Baby Boomers (60 percent). Just 16 percent of young workers show strong interest in robo-advice.

Myth 7: Millennials are all the same and have similar investing attitudes and behaviors.

Reality: An ill-advised statement to make about any group, urban Millennials are 50 percent more likely than rural to own taxable investment accounts. A third of young male Millennials are extremely or very confident in their decisions about money, compared to less than a quarter of females.

“Millennials are expected to inherit more than $40 trillion in the coming decades,” Bjorn Forfang, deputy CEO of the CFA Institute, said in a statement. “By providing insights into investment preferences and concerns, this research can help financial professionals engage and better serve the needs of the next generation of investors.”


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