How Millennials may shape the future of asset management

By David Beach | 16 November 2017

The PIMFA Millennial Report 2017 was published today, with the aim of learning how the youngest working generation views personal investment management. Bobsguide's very own Millennial, David Beach, takes a look.


Foresight is not often associated as the strongest suit of the young. Gratification tends to be instantaneous; remember #YOLO (you only live once)? Indeed, a similar canonised mantra  ‘live fast, die young’ leaves little doubt that millennials, as an age demographic, do not lose sleep over the long term financial plan.

Much has been made of the relationships that each different generation has to finance - working, living and saving - where each generation believes the next has it easier. For instance, the Baby Boomers had a very regimented career path - study degree at university, begin work in relevant area and finally, progress in that career. Millennials do not have that same rigidity, where a degree is no guarantee of work, but they are agile and able to seamlessly incorporate emerging technological skillsets into their stride. For Millennials, flexibility = adaptability but adaptability = uncertainty. It is that uncertainty of income that makes the Millennial market intriguing for financial services.

The recent PIMFA Millennial Report 2017 takes one step in that direction to provide some statistical substance to Millennials and their financial decisions. The report, written by Millennials for Millennials, more specifically looked at how the generation invests its wealth, or at least, how it approaches investment.

Who are these 'Millennials' you speak of?

Defining separate generations tends to be blurred and unclear in the early, grey space between generational shifts. The use of Millennial, as a label, has gained some sort of cherished angst among its members on social media, who identify themselves around the emergence of the online world - not to be confused with post-2000s who know no other life without the internet.

The report conducted surveys with Millennials who were mostly 24-35 year olds and earning £30,000 to £50,000 p/a.

What do Millennials actually think of wealth management?

Two thirds of respondents had little knowledge of the wealth management industry whilst half admitted having a negative perception of the industry. Having said that, 50% said they would be open to using wealth management (wealth permitting) whilst 60% indicated they would use an online platform to invest that wealth.

Naturally, by virtue of being at the beginning of their career and limited savings opportunity, of those Millennials that used wealth management the majority had accrued their investment funds either through inheritance or self-made wealth.

Where do Millennials invest their wealth?

Asked where they allocate their income, there was an average 25% allocation to their mortgage whilst regular savings comes in close second with 20%. Investment fund and pensions were 11% and 10% allocation of Millennial income, whilst, encouragingly, debt management came in at 7%.

When presented with the scenario of investing £100,000, the most common allocations went to Home (39%), Investment allowances e.g. ISA (19%) and Cash savings (13%). 25% would put a portion of the £100,000 towards investment - 50% would put less than £10,000 in. 36% would allocate the money to a mortgage/home ownership whilst student loan and debt were of low priority at less than 5%. No doubt because long term repayments are seen as preferable.

What do Millennials think of the long term?

Time perception is another marked difference for younger generations. Two thirds of Millennial respondents viewed long term as less than 10 years but most Millennials have pensions invested for 25-30 years.   

When asked to rank their financial priorities, supplementing income instead of saving was a high priority as was financial security in retirement. School fees planning, inheritance planning and philanthropy were respectively the least important. Evidently, Millennials are reluctant to invest in the long term, perhaps symptomatic of the Right-Now economy.

Who can give Millennials wealth management advice?

It seems that the personal touch reigns supreme for Millennials who valued advice above all from a family member (30%) or someone from a small firm (28%). Large firms lagged behind at 17%. In both instances, it could be argued that both of these ‘advisories’ are more in-touch with the person behind the investment, and thus the personal aspect is attractive to Millennials. This is strange, as Millennials are fairly nonchalant about being treated as another brick in the wall in other retail sectors. Not surprisingly, Millennials would ask someone with experience over someone of their own age, though a combination of the two was preferable to all. After all, most 50-something investment managers are young at heart.

In a similar vein to the personalised service, Millennials aren’t all that taken to accessing investment completely online. Only 12% opted for an online platform whilst 15% opted for an app platform. Of course, they wanted some elements of online, although one would hazard a guess that this is purely for convenience.

The greatest preference for accessing investment management services was to have an online service with face-to-face offered. Again, this reinforces the personal touch that Millennials want to put their faces to their investment funds and appeal to hedge managers’ human side.

What do Millennials really think of data security?

70% of Millennials are not aware of how firms use their data. This is probably a combination of consumer education and the taboo nature of using personal details for commercial purposes. In terms of online identity, Millennials were most comfortable with firms holding their LinkedIn and property details, a middle ground on social media such as Facebook, Twitter and Instagram, and least comfortable with firms holding medical records, political views and GPS real time location.

Similar to putting a face to investment management, the report found that Millennials were felt far safer allowing wealth management firms with which they had a personal relationship holding their data, whilst they did not feel safe at all with an online only firm.

How do you attract Millennials to wealth management?

The report also sought to build a better understanding of how to engage Millennials. Given that mortgage investment is a priority, products should be packaged around this. Firms need to promote and offer a more diverse range of ISAs than they currently are. Promotion of ISAs also needs to be clearer on who can and can’t use added functionalities.

And what of savings? Millennials increasingly have a Right-Now philosophy but have small pension pots from multiple Defined Contribution schemes. The amount for investment are usually too small to justify formal industry advice. The report concludes this is the area of the Millennial wealth management market that is ripe with opportunities. Would leveraging emerging technologies, such as robo advisors, cut costs and appeal to this segment of the market?


For further reading, take a look at bobsguide's asset management solutions, as well as the PIMFA 2017 Millennial Report in full.

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