Millennials are establishing priorities for their investments as they increase their wealth
As the oldest millennials in the U.S. reach the age of 41, data from the U.S. Census Bureau and Federal Reserve show that demographic has surpassed baby boomers as the largest living adult group in the country. They’ve also seen their wealth grow from US$4 trillion in 2019 to US$9 trillion by the end of 2021.
It’s against that backdrop that RBC Wealth Management recently conducted a poll of 1,000 high-net-worth millennials, which found that while 84% of them routinely consider their financial stability, many are unaware of what they must do to achieve it.
The poll aimed to learn how clients' requirements might be met by financial advisors.
“Our data shows they have a high degree of trust in financial advisors, and with many wealthy millennials expecting to come into money from inheritance or the sale of a business, their advisors will serve as a crucial resource for information and support,” Angie O’Leary, head of wealth planning at RBC Wealth Management – U.S., said in a statement.
A total of 250 high-earning, not-yet-rich millennials (HENRYs) and 750 high-net-worth millennials (those with household incomes of at least US$250,000 and investable assets between US$100,000 and US$999,000) participated in the December online quantitative poll.
According to the poll findings, wealthy millennials value professional advice.
When asked how they manage their finances in addition to other commitments like home ownership, establishing a family, caring for elderly parents, and setting money aside for their children's school, 59% of respondents said it was tough.
After eliminating debt, building up an emergency fund, and funding their 401(k) to the maximum, 72% of participants stated they were uncertain about what to do next.
Three quarters (75%) of those surveyed said they desire the same things as their parents but cannot afford them. By investing and saving, they want to create long-term security.
The main financial aim for 38% of respondents was stock market investing, while the top financial goal for 33% was retirement savings. Starting a business was the primary financial objective of 27% of respondents.
“Millennials have an entrepreneurial mind-set and are looking at ways to create other sources of income through business ownership, investment property or a side-hustle,” O’Leary said.
Millennials are establishing priorities for their investments as they amass wealth.
According to 85% of respondents, it is crucial to take environmental, social, and governance facts into account when making investment decisions; these decisions are a key component of their overall investment strategy.
In line with this, 92% of respondents wanted their existing or potential financial advisor to be aware of how to use ESG data when suggesting an investment to achieve those goals.
Investors claimed that 83% of them would change financial advisors if they lacked ESG expertise.
“Millennials’ strong appetite for ESG creates an opportunity for advisors to incorporate ESG data into their investment and wealth planning, as well as advise and educate the younger generation of investors on how to invest with purpose,” said Kent McClanahan, vice president of responsible investing at RBC Wealth Management – U.S.
