The new study that was just released by Broadridge Financial Solutions shows just how much impact the Millennials have on the U.S. financial market and the investing environment. Millennials will quickly become the largest generations and the wealth-management providers must adjust to the changed mentality and what they will mean for the future of investment. The new generation is changing the landscape in different ways, they want to have customized advice, 24/7 access, less risk-taking, and being able to be in control of their decisions regarding finances.
Millennials Engage With Impact Investments
But this is not all that matters to the Millennials. Today’s younger generation seems far less driven by narrow definitions of economic returns. US Trust found 75 percent of wealthy millennials “consider the social and environmental impact of the companies they invest in to be an important part of investment decision-making”. Two-thirds “view their investment decisions as a way to express their social, political, or environmental values”.
According to a survey by Morgan Stanley, “millennials are twice as likely to invest in a stock or a fund if social responsibility is part of the value-creation thesis”. A report by Fidelity says “a majority of affluent millennials (77 percent) and Generation X donors (72 percent) indicated they had made some form of impact investment, such as investing in a publicly-traded company with good social or environmental practices”. Among the baby boomer and older generation, the ratio was a mere 30 percent.
Broadridge Study Highlights Millennials’ Increasing Influence
Broadridge Study is the first of its kind, conducted on such a large scale and providing valuable insights on how Millennials are gradually increasing their influence since the end of 2017. The study covered tens of millions of U.S. investor households and billions of data points, providing a unique perspective across generations, geography, educational attainment, channels, investment products, and wealth tiers.
“We are all witnessing an unprecedented and accelerated democratization of U.S. investing,” said Bob Schifellite, Broadridge’s Investor Communication Solutions President. “The signs are undeniable as younger investors, particularly Millennials, grew as a percentage of investors studied from 9% to 14% during this period. Additionally, households with the smallest amount to invest, referred to as the Mass Market, grew in influence from 30% to 38% of investing households. Many are investing using cost-effective ETFs, and more have broader access to low-cost institutional shares, highlighting a changing investing landscape.”
Millennials As Up-And-Comers In The Investing Landscape
Some of the key findings of the study showed that Millennials truly are the up-and-comers in the market. While the percentage of Boomers investors has declined from 46% to 43% between 2017 and 2020, the percentage of Millennials investors has increased from 9% to 14%, similarly to the proceeding Gen X, growing from 24% to 27% in the same period of time.
“The study highlights trends that are indicative of things to come and present an enormous opportunity for asset managers and advisors who adapt to address the emerging needs of investors,” said Dan Cwenar, Broadridge’s President of Data and Analytics. “Money is expected to continue to flow into low-cost investment vehicles such as passive and active ETFs and Millennials and Mass Market investors will continue to gain influence as their assets grow.”
The study represents 44 million U.S. households that invest in mutual funds (open-end, closed-end), U.S. equities and exchange-traded funds (ETFs) sold through financial intermediaries. The research utilized a sample of 20,000 households extracted from a dataset of those 44 million investor households spanning billions of data points.
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