Understanding the Millennial Mindset

Millennials seem to be perennial targets, criticized for various perceived faults including poor saving habits. However, this caricature in addition to other tropes often associated with the generation are inaccurate. Josh Nunn, a millennial and associate financial advisor at Financial Sense Wealth Management, discussed these perceptions and what it means to be a millennial on a recent episode of Lifetime Income with Jim Puplava.

Generational Trust

Millennials watched their parents experience two significant bear markets, Nunn noted, which has affected their attitude toward money. Ultimately, it has led to greater risk aversion in this generation. In general, millennials tend to be less trusting than previous generations. Millennials are more fiscally conservative and less willing to invest in stocks, Nunn noted. However, this does not mean millennials are less likely to be savers. Today millennials are some of the youngest savers, starting around 22, Nunn noted, where Gen Xers and boomers began when they were older, around 27 and 35 respectively.

Every year Bank of America conducts a study called the Better Money Habits Millennial Report, and they found that 63 percent of millennials are saving, which is closely in line with that Gen Xers and boomers.

In terms of trust, there are some interesting findings when it comes to millennials, Nunn noted. A survey conducted by the Pew Research Center in 2014 asked, “Generally speaking, would you say that most people can be trusted or that you can't be too careful in dealing with people?” The survey found that 40 percent of boomers and 31 percent of Gen Xers believe most people can be trusted. However, only 19 percent of millennials agreed with the question.

UBS Investor Watch conducted a study in 2014 to determine whom generational cohorts trust most among parents, friends and financial advisors. This study found 40 percent of non-millennials trusted financial advisors, 14 percent trusted friends and four percent trusted their parents the most.

“Interestingly, millennials are quite the opposite,” Nunn said. “The study revealed that millennials put most of their trust in their parents, which was at 41 percent, followed by their friends at 26 percent and then dead last they trusted financial advisors, which was at 14 percent.”

Social Perspectives

In today’s political climate, many people believe there’s a shift toward socialism among millennials, though Nunn said more nuance is required before making such a generalizing statement. There is a greater propensity for dependence on the government, Nunn noted, but another popular trend among millennials is in independence and self-empowerment. The group is interested in being self-taught and relying on their own acquired knowledge base, he added.

When it comes to socialism, Nunn stated, there is probably a generational swing at play toward progressive ideas, in contrast to the typical pattern of older generations favoring conservative fiscal policy.

“Younger generations seem to be a lot more tolerant and open minded to outside ideas like socialism that haven't been openly accepted before,” Nunn said. “I wouldn't say that it's widely accepted among millennials, but I do think it's more so accepted as some kind of political standing or a perspective.”

Cohort Values

Millennials grew up in the age of the digital revolution, and it has colored their perceptions in numerous ways. Instantaneous access to information and social media define the generation, Nunn noted, and has led members to value flexibility, instant access and globalization.

The generation tends to value experience over asset accumulation, Nunn noted. Money is still important, but it takes a back seat to other goals.

A 2018 report from Deloitte found that 46 percent of millennials were more attracted to making a positive impact in their communities or society at large versus more traditional aspirations, Nunn noted, such as starting a family or having kids.

“Despite all the stereotypes about millennials, believe it or not, their money habits are actually just as good if not better than other generations,” Nunn said. “So while they're in a good financial position, they actually don't believe so themselves, which is interesting. … Robo-advisors right now are very popular among millennials as well as other kinds of young, interesting investing companies. … I think that we, as financial advisors, can be a key to a lot of those millennials out there who may be looking for a financial advisor, but just don't know where to start.”

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