Five Important Financial Truths about Millennials Revisited

Transcript of Podcast Episode 264

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, we take a look back at one of our favorite previous episodes, five important financial truths about millennials.

It may seem hard to believe, but the oldest group of millennials, defined as anyone born between 1980 and 1995, has already turned 40.  A recent study by The Natixis Center for Investor Insight provides some valuable insight as to how millennials see the world.

The Natixis Center for Investor Insight is a global research initiative based in Boston.  It focuses on the critical issues shaping today’s investment landscape. Their study—covering over 7,000 millennial investors with at least $100,000 in investable assets—pointed out that things have changed significantly in the last few years.  Nowadays, millennials are starting families, building careers, growing businesses and in some cases, running global corporations.

The report looks at how millennials have adapted to a changing financial landscape, and how they’re setting a new standard for investing.

Here, in order, are the five new truths the study outlines.

1. Algorithms can’t solve every financial problem. In spite of its tech-savvy reputation, this generation has not embraced so-called “robo” advisors, that is, automated financial planning, as much as many people might think.  The study shows that only 7 percent rely on automated advice, while 40 percent prefer to have a personal relationship with a face-to-face advisor.  And perhaps most surprisingly, less than 25 percent trust social media for reliable information.
2. Risk is real when there’s more on the line. Millennials as a whole seem to be comfortable with taking more investment risk, but that may change as market losses extend over a longer term.  As the study states, “they may find themselves overexposed to portfolio risk – and get caught by surprise when markets get rocky.”
3. You don’t have to sell out to be a capitalist. The concept of ESG (environmental, social, and governance) investing is especially popular among millennials.  In fact, 63 percent believe they have a responsibility to “use their investments to help fix societal issues.”  This is especially true in the United States.  Natixis estimated that 46 percent of American millennials have invested in ESG, higher than any other country they studied. But it’s not the only factor.  The group as a whole views ESG factors alongside the more basic fundamental factors.
4. Retirement feels a lot closer at 40. The individuals in the study have a median amount of $150,000 in retirement savings.  But they have lots of worries that were not so prominent a few years ago.  A full 47 percent believe that they will never have enough money to retire.  66 percent say that they may have to work longer than they originally thought.
5. Pandemic habits are reminders of financial basics. The COVID-19 pandemic has forced millennials to re-evaluate their financial behaviors.  The most important lessons they’ve learned: keep your spending under control, make sure you have a sufficient emergency fund, and understand how important it is to re-balance your portfolio.

With all these new responsibilities comes an increased need for family protection.  Life insurance is one place where millennials tend to lag their older counterparts.  A 2021 survey by LIMRA found that only 49% of millennials have life insurance.

But what kind of insurance works best?  If they have any insurance at all, term insurance is the most popular choice.  But the problem with term insurance is that it eventually disappears.

Kevin Wark, a tax consultant for the Conference for Advanced Life Underwriting, has an interesting take. ““What I’ve found with friends and clients is that they wish — when they’re in their 50s — that they had bought more permanent protection.”  So while term coverage may work well when you’re young, the need is likely to be permanent.

Your Security Mutual Life insurance advisor can help you sort through your options and get the process started.  Your advisor will assemble your team and coordinate with your attorney and tax professional to review your situation and to determine the plan and strategies that are appropriate for you and your family.

It may be hard to believe, but the oldest millennials are already approaching middle age.  And while they’re facing many of the same challenges as their older counterparts, they are coming up with their own unique solutions, ESG investing being just one example.  As the report states “Millennials get a bad rap.  They’re not 20-something hipsters obsessed with avo-toast and Instagramable experiences anymore.”

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

 The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different.  Specific advice needs to be tailored to your situation.  Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

 To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and Twitter.  Thanks for listening, and we’ll talk to you next time.

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