Millennials Are Financially Conservative And Risk Averse

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The post-post-baby boom generation has had several names, but the moniker Millennial seems to be gaining the most currency. Much has been written about this technology-savvy, entitled and spendthrift generation, and most people assumed these characteristics would carry over into Millennials’ financial lives, but a recent report from UBS Investor Watch titled “Think You Know the Next Gen Investor? Think Again” argues most of these assumptions are dead wrong.

Millenials are financially conservative

The primary conclusion of the UBS report is that Millennials are as financially conservative as any generation in the last 60 years. “The Next Gen investor is markedly conservative, more like the WWII generation who came of age during the Great Depression and are in retirement. This translates into their attitude toward the market as we see Millennials, including those with higher net worth, holding significantly more cash than any other generation. They fully buy into the redefinition of risk as permanent loss, an investor insight we observed in the 2Q 2013 edition of UBS Investor Watch.”

Skeptical about long-term investing, especially equities

Related to their basic conservative bent and having observed the inescapable me-first greed that pervades Wall Street today, Millennials are skeptical about the value of equities and even long-term investing more generally. “And while optimistic about their abilities to achieve goals and their financial futures, Millennials seem somewhat skeptical about long-term investing as the way to get there.”

The UBS report also highlights that Millennials are much more likely to keep a larger amount of cash on hand compared to most Gen X or baby boomers. “Millennials hold more than half of their assets in cash (52%), with less than one-third of their assets (28%) in equities. This is directly counter to traditional long-term investment allocation advice.”

Family financial stability

Somewhat surprisingly, family is also a high priority for Millennials according to the UBS survey. The report describes the mutual “web of worry” binding Millennials and their parents. “Millennials are as worried about their parents as their parents are about them. As a result of seeing their parents’ retirement and investing plans disrupted by market volatility, Millennials put concerns about their parents’ financial stability near the top of the list of worries. In turn, parents of Millennials worry that their children will have a harder time achieving financial stability and success, and feel they must provide help along the way.”

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