Approximately one year ago, which seems like a decade ago in COVID-19 time, millennials and their Gen Z counterparts, were creating endless memes, and revolting against Wall Street was all the rage. If you think back to that time and the narratives surrounding markets, we all had a picture in mind of bored young adults downloading apps on their phone, day-trading fractional shares. While that may have been true then, interesting research suggests that’s not true now. More importantly, the research also suggests that lessons learned by these up and coming investors can serve as a solid foundation upon which to establish a financial plan and deliver professional advice to help them achieve their financial goals.  

Millennials chasing memes #tendies

In February 2021, Schwab conducted a study and the results led them to define 2020 as, “The Rise of the Investor Generation.”1  According to their research, approximately 15% of all current U.S. stock market investors got their start in 2020. When you consider the number of account openings resulting from the move to zero-commission trading across major retail brokerage platforms, and the fact that some of those platforms support fractional shares, that’s not too far-fetched. In fact, millennials are overrepresented with 51% of new investors belonging to this demographic. 

These freshly-minted investors are marked by their optimism, their belief in the bull market that was interrupted in early 2020 by COVID-19, and their intent to invest more in the stock market. Despite the headlines around GameStop, AMC and other popular meme stocks, while 44% of these investors were interested in trading for short-term gains in 2020, that proportion was nearly halved with only 28% of these investors having planned to invest for the short-term in 2021. That means 72% of these investors are now focused on the long-term. 

Diversification? #diamondhands

In April 2021, The Motley Fool conducted a survey that suggested two-thirds of millennials own stocks, while only 25% own index funds.2 That’s an interesting statistic when taken at face value. Millennials are perfectly comfortable owning individual securities and taking risks with their money while still remaining focused on accumulating wealth. This is evidenced by the fact that 58% of them own growth stocks while only 28% own meme stocks. As we all know, experience can be the best teacher in the world of investing. 

It is great that there is increased interest in investing among millennials. As an industry, we all know of the coming wealth transfer to this generation. The fact that millennials demonstrate an interest in investing and willingness to take risk is encouraging when we think about what it will take to help them reach their financial goals. That said, what do we know about their expectations given their behavior? While we don’t have specific estimates for this cohort, Schroders’ 2020 Global Investor Study suggests that U.S. equity investors expect to earn a 15% annualized rate of return over the next 5 years,3  which stands in stark contrast to the expectations of many professional investment strategists whose mid-single digit estimates fall far short of this level. It’s possible that the recent performance of individual securities in the technology sector, among others, is a strong influence on retail investors’ collective set of expectations. Whatever the case, I am reminded of the results of a survey we conducted with a panel of advisors in 2019 who suggested that approximately 20% of investors suffer from the behavioral bias of belief perseverance.4 I suspect that number might be higher were we to ask the same question today.

So what’s the plan? #yolo

Why is this something we need to pay attention to? While in Reddit parlance #yolo can be the rallying cry for risk taking, in the world of financial planning where retirement is one of the primary objectives, #yolo serves as a stark reminder that we only have one chance to help clients achieve their long-term financial goals. Millennials understand this too, potentially more than other demographic cohorts. According to the 21st Annual Transamerica Retirement Survey of Workers,5 39% of millennials surveyed have a written financial strategy for retirement, versus 32% of Gen Xers and 24% of baby boomers. When we include those who have a plan that isn’t documented, millennials still lead the pack at 82% versus 72% and 73% for Gen Xers and boomers, respectively. Only 43% of millennials surveyed currently use a professional financial advisor. That statistic is fairly consistent across cohorts where 38% of Gen Xers and 41% of baby boomers surveyed indicated that they use a professional financial advisor. 

While the focus here is on millennials, this broader advice gap represents opportunity for financial advisors. That fact is particularly true when you consider that 85% of millennials, 76% of Gen Xers, and 70% of baby boomers discuss savings, investing and planning for retirement at least occasionally with family and close friends. If, for more than 80% of millennials, the topic of investing for retirement is top of mind at least occasionally — and there is a propensity towards planning — but only 43% of millennials are receiving financial advice, that means there is opportunity to deliver personalized advice to approximately 40% of the millennial population in the U.S. That’s true of Gen Xers and baby boomers as well, based on the data.

How do you reach these potential clients, in particular millennials? Here are three steps that you can take to help close this advice gap:

  1. Focus on meeting these prospective clients – while it’s tempting to try to do everything, as an advisor, your time is best spent with your existing clients or trying to identify new ones, not with your internal systems, administrative processes, or other operational tasks. Consider outsourcing your technology and your investments to create time for client engagement.
  2. Personalize their portfolios so they too are invested in them, not just their money – start with a co-planning process that allows you and your new clients to work together on a financial plan that aligns with their unique financial goals. Simply dictating a plan won’t work given that 82% of them have certain ideas in mind. Using a scalable, models-based approach does not mean that you cannot personalize. You have the ability to create portfolios uniquely aligned with your clients’ goals that may also provide the ability to align their specific investments with their personal values. For millennials and Gen Z, this will be critical to your success over time.
  3. Coach them through the ups and downs – this new crop of investors, of which millennials are the dominant cohort, learns quickly. That’s a good thing. As their financial advisor, you can coach them through the market ups and downs that will inevitably come. As the annual Dalbar Quantitative Analysis of Investor Behavior study consistently shows, staying invested can be a key determinant of long-term individual investors’ returns.

You may be wondering why this influential group is one you should be focusing on. The Transamerica study suggests that they are saving for retirement at a higher rate than other cohorts. They are actively investing. They have learned some valuable lessons. They want a plan for retirement. They are your next generation of clients. #investing

1. “The Rise of the Investor Generation,” Charles Schwab, 
2. “What Are Gen Z and Millennial Investors Buying in 2021?” The Motley Fool, 
3. “Global Investor Survey,” Schroders, 
4. “SEI Financial Advisor Survey,” SEI,, April 2019, 608 respondents.
5. “Living in the COVID-19 Pandemic: The Health, Finances, and Retirement Prospects of Four Generations,” Transamerica Center for Retirement Studies,

Investing involves risk including possible loss of principal. No mention of particular securities should be construed as a recommendation or considered an offer to sell or a solicitation to buy any securities. 


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