A study conducted by Investopedia reveals that 43% of US affluent millennials use a financial adviser. Further, millennials who are familiar with investing are more than 2X as likely to have a financial adviser than their less knowledgeable peers.
Better investment performance
Interestingly, the study found that millennials who engaged a financial adviser saw their investments perform better in comparison those who didn’t.
Trusted source for financial advice
For millennials, financial advisers are the most trusted source for financial advice. Nearly two-thirds (65%) of the affluent millennials surveyed said they trust financial advisers. They also trust books (58%), TV shows (54%), newspapers (53%), podcasts/radio (49%), magazines (48%), websites/blogs (37%), and YouTube (or similar video platform) videos (27%) for financial advice.
It’s not just the affluent who trust advisers the most for financial advice. Another survey conducted by CFA Institute earlier among retail investors had found that around 65% of advised retail investors worldwide say that their financial adviser is the most trusted source of investment advice.
Why investors hire and fire advisers
The CFA survey found that while selecting a financial adviser, retail investors assigned higher importance to trustworthiness over investment performance. On the other hand, the common reasons why they leave their advisers are underperformance and a lack of communication or responsiveness. Being accessible helped the financial industry gain trust among investors.
Why do they trust advisers the most?
The Investopedia survey found that millennials are keen to work with advisers due to their ability to build personal connection, having relevant knowledge and skills in finance, getting a customized financial plan, and the belief that advisers are accountable since their careers depend on their knowledge and expertise. Another interesting finding was that millennials whose parents had a financial adviser are more likely to work with an adviser.
Methodology
The survey was conducted among affluent millennials who came into adulthood during the great recession and have encountered challenging economic headwinds. The online survey covered 1,405 Americans, comprised of 844 affluent millennials (ages 23-38) and compared their actions and attitudes to 430 Gen X and 131 Gen Z respondents. See the detailed methodology here. Generation X is the demographic cohort following the baby boomers (born between 1946 and 1964) and preceding the millennials (born between 1981 to 1996). Generation Z is the demographic cohort born during 1990s to early-2000.
