Investing

Many Millennials Think Short-Term About Investing

By John Manganaro editors@plansponsor.com | April 20, 2017
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In juxtaposition to Millennials’ unrealistic return expectations, the generation is more than twice as likely to consider themselves “extremely” or “very” knowledgeable about investing. Yet nearly two-thirds of Millennials define “long-term investing” as applying to a period of less than five years—a definition most investing professionals would disagree with.  

There are some ways in which Millennials are demonstrating prudence and foresight, AMG Funds finds. For example, Millennials are “much more likely than older investors to be concerned about having enough money for their retirement years (69% vs. 28%).”

The survey report goes on to show many Millennials prefer computer-generated portfolios and automated asset-management products. “Specifically, Millennials are at least twice as likely as the broader group of respondents to believe that advisers recommend generic portfolios as opposed to providing customized advice, and that computer-generated portfolios are less risky and generate higher returns than those managed by humans,” AMG Funds says. “Nimble and adaptable advisers may be successful in connecting with Millennial investors through education and advice that focuses on helping them to meet their long-term goals.”

The analysis concludes that Millennials “seek out professional financial advice for different reasons than older investors.” Forty percent in the younger age group cited a desire to work with advisers “to enter new investment categories,” while a desire to improve results relative to their own investing ability was the prime driver for Gen X investors. Boomer investors cited a major life change or upcoming event as the most common trigger.

“When asked about the benefits of using a robo-adviser, respondents among the full range of investor age cohorts pointed toward cost (67%), unbiased advice (58%), and the flexibility to engage at a time of their choosing (57%),” AMG Funds says. “The survey results found stronger responses to negative associations regarding robo-advisers relative to responses regarding the perceived benefits; 81% of respondents felt that robo-advisers use a cookie-cutter approach; 80% believe that computer-generated portfolios do not account for qualitative information; and 78% criticized robo-advisers for not offering a dedicated point of contact.”

For more information on the results of AMG Funds research, visit www.amgfunds.com/wealth-trends

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