A research report from Finra and the CFA Institute sheds some light on millennials’ investing habits and philosophy by first debunking common beliefs about that generation. Overall, the researchers see opportunities for the industry to educate millennials about investing and investment products, particularly millennials in rural communities and among some minority populations. According to the report, it is commonly assumed that millennials: have lofty goals (for example, start a business, retire at 40, etc.), which carry over to their financial goals and aspirations; are overconfident in their financial lives; are wary of the financial services industry and by extension skeptical of financial professionals; and being digital natives, millennials naturally gravitate toward robo-advisors. The researchers examined attitudes on investing among three millennial segments — those with no investment accounts of any kind, those with retirement accounts only and those with taxable investment accounts (most also owned retirement accounts) — and compared them with their Gen X and baby boomer counterparts. Some of the findings included:
- 50% of non-investing millennials cite insufficient savings as a major barrier.
- Nearly four in 10 millennials (39%) cite lack of knowledge as a major barrier to investing.
- More than one-third of millennials say they have never heard of robo-advisors, even when a definition is provided along with examples of robo-advisor firms. Another one-quarter say they have heard of robo-advising but are not very familiar with it. Just 3% say they have used a robo-advisor.