Millennial Investors More Conservative, Less Trusting of Financial Advisors than Baby Boomers and Gen Xers, According to Accenture Survey

Millennial investors are more conservative and less trusting of financial advisors than baby-boom and Gen X investors, and more inclined to consult other sources before accepting financial advice, according to an Accenture (NYSE: ACN) survey of more than 1,000 high-income, digitally savvy U.S. investors. The survey also revealed that millennials are the most determined of the three generations to learn how to invest and pass along wealth to their families.

Forty-three percent of millennial respondents (age 21-30) described themselves as “conservative” investors, compared with 31 percent of baby-boom respondents (age 46-70). Millennials were also significantly more likely than baby boomers to say they prefer “tried and true” investment options (27 percent vs. 19 percent, respectively). They were four times more likely than baby boomers (28 percent vs. seven percent, respectively) to say they are unwilling to act on the advice of a financial advisor without first consulting other sources. Forty-four percent of millennials said they “spend a lot of time researching alternatives before making a major purchase decision” – compared with 33 percent of baby boomers.

Viable Target

“Surprisingly, the millennial generation has emerged from two boom-and-bust cycles even more conservative about investing and more skeptical of financial advice than the generations that were hit hardest by the market,” said Alex Pigliucci, global managing director of Accenture Wealth and Asset Management Services. “This poses a fundamental challenge for financial advisors who will see the greatest transfer of wealth in history from boomers to their heirs over the next several decades. But counter to prevailing wisdom, our research suggests millennials are a highly viable target for advisors.”

According to the survey, published in Accenture’s new report “Generation D: An Emerging and Important Investor Segment,” millennials are the most driven among the generations to build and pass along wealth, and the most interested in mastering investment strategy. Forty percent of millennial respondents said they are “determined” to pass along wealth to their families, compared to 25 percent of baby boomers and Gen Xers (age 31-45). Forty-four percent of millennials described themselves as “extremely” interested to improve their understanding of investing compared to 38 percent of older respondents.

The survey points to unmet demand for online investor education and advisor-interaction tools that could increase millennial investing and help bridge the “trust gap” with financial advisors. Presented with concepts for new online educational resources – ranging from online investment forums and educational web-based video services, to virtual advisor chats, webinars and social media – millennial respondents showed overwhelming interest.

A Leading Indicator

“The behaviors and attitudes of millennials are not just a matter of long-term strategy for wealth managers; they are a leading indicator of the need for change today,” added Pigliucci. “The recent financial crisis brought a sea change in attitudes toward investing and distrust for the financial industry across all generations. The explosion of digital and social channels in everyday life is simultaneously spilling into consumers’ relationships with their financial institutions. With half of all baby-boom investors currently active in social media and a vast majority active online, the innovations that will capture the millennial generation also will help capture the most coveted demographics among Gen Xers and baby boomers.”

According to Accenture’s research, there are more than 75 million digitally savvy investors in the U.S. with high-income, assets and education, which Accenture refers to as “Generation D” or “Gen D.” This highly coveted investor demographic, upon which Accenture’s survey focused, makes up 44 percent of the online, U.S. population, aged 18-65, and represents approximately $27 trillion in total assets.

Gen D members see investing as a viable path to building and passing wealth to future generations, and they recognize the need for financial advice. But they are less and less likely to view financial advisors as trusted sources. For example, 59 percent of respondents across all generations said they had actively sought financial advice recently, but only 40 percent had turned to a financial advisor, according to the survey.

“The evolving investment behavior of Generation D – from baby boomers to Gen Xers and millennials – has brought a seismic shift in the client-advisor relationship. Wealth managers who provide transparency, education and tools that make investing easier to understand -- and those that provide the rationale behind their recommendations -- will be positioned to achieve trusted-advisor status among market-leading demographics,” concluded Pigliucci.

Accenture Wealth and Asset Management Services provides management consulting, technology and outsourcing services to financial institutions to optimize analytics for wealth and asset managers, improve advisor productivity, help drive sales, reduce costs and manage risks. Its clients include eight of the top 10 global wealth managers and seven of the top 10 global asset managers.

Methodology

Accenture commissioned an online survey of 1,005 high-income, tech-savvy U.S. investors regarding their relationships with financial advisors as part of an integrated quantitative and qualitative study of investor attitudes and behaviors. Respondents included 253 baby-boomer consumers age 46-70 (median net worth $655,000) 251 Gen X consumers age 31-45 (median net worth $238,000), and 501 millennial consumers age 21-30 (median net worth $70,000) – with an even mix of men and women. All respondents said they have input into household investment decisions; are current investors or intend to invest within three years; and use social media at least every week. The survey was conducted between August and September 2012 following focus group discussions in major U.S. cities with baby boomers, Gen Xers and millennials in July 2012.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with approximately 259,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.