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Where Are The Millennials?

Innovation is the future & disruptive tech start-ups are the babies that are destined to be swooned upon, by those who will have deep pockets. Rest will be thrown by the wayside

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Visual Capitalist, a data-crunching expert on world affairs & Morning Brew, a newsletter, surveyed 9800 millennials in North America & EU to ascertain their investment behaviour.

Going to inherit $30 trillion in 30 years, this group's investment pattern will decide the future of the world's finance. 

As this inheritance hits their accounts, these millennials should either know what to do or have access to the best brains to guide them in their wealth management pursuits. Surprisingly, the survey shows very low levels of financial literacy, just 18%, implying that market for quality financial advice will only grow in future, as 82% with fat bank balances, will be scouting for such advice. Survey clarifies that human financial advisors will be preferred for robotic advice.

Where are these millennials? 68 per cent are presently employed full-time, while the remaining are mostly getting a proper education. This also explains the direction of their preferred choices for investment.

Nearly 24 per cent want to invest in education, while another 21 per cent on cars. Nearly 20 per cent desire marriage & another 20 per cent want to put their money in homes.

This throws up interesting conclusions that Ivy league universities & exotic cars will always be attractive destinations for money flows. Also, setting up houses will always remain an essential prerogative of the rich millennials.

Habits of investment were captured by this survey. Interestingly, 32 per cent constitute the younger group of 18-22, investing up to $5000 annually. Nearly 37 per cent from the age group of 23-27 are putting $10000 to $50000 yearly. It is the more established 28-35 group apparently, that gets into investments greater than $50000 per annum. Investment firms need to spread their net to this age group to create loyal customers for decades.

Where to invest is the million dollar question. Tech-savvy millennials, overwhelmingly choose tech sector (50%), while about 11 per cent pitched for Health, energy & real estate sectors each. Corroborating low financial literacy among millennials, only about 6% opted for financial services. It is clear then, millennials are looking for disruptive tech to invest. Traditional manufacturing may become lackadaisical for millennials, family businesses must see the writing in the wall now.

The three top companies catching the attention of the millennial most, remain the market leaders, Amazon, Apple & Google with the former garnering 18 per cent of the vote. As e-commerce spreads In the emerging economies, millennials seem to have an insatiable appetite to make it grow further. Brick & mortar firms will become second class as e-tailing becomes the world's norm.

Millennials display two other characteristics; only 21 per cent believe in the social impact of their investments meaning philanthropy has not touched them through their genes so far. The world can't become more equitable, hence, it appears.

Second, how to select financial advisors remains largely based on fees & simplicity of advice...with the breadth of asset class thrown in. Maximising returns through risky investments or through large scale diversification does not appear to emerge from this survey.

Going by this important survey, following inferences can, therefore, be drawn;

Findings may not change drastically if Asia or Africa or Australia is added as millennials appear to behave in a similar fashion

Need for enhanced courses in financial literacy should become the focus of all universities since financial acumen always pays, especially in the long run.

Financial advisory firms that build rock-solid foundations of ethics & effectiveness, will never face a dearth of business worldwide.

Catching the millennials young is apparently very sensible to win loyal millionaires, as they inherit large sums in the next 3 decades. Banks & financial institutions need to focus on this bunch quickly & comprehensively.

Innovation is the future & disruptive tech start-ups are the babies that are destined to be swooned upon, by those who will have deep pockets. Rest will be thrown by the wayside.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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J.K. Dadoo

The author is a retired IAS officer

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