There is a lot of buzz about this next generation of young adults in the U.S. workforce as they begin impacting and shaping the economy. Lately, the trend is to define a generation and to stereotype their culture to better understand what they have done in the past, predict what they might do in the future, and evaluate how this will affect us all. For example, there are the Traditionalists, born between 1925-’45, who are considered to be patient, respectful and hard-working. Next came the Baby Boomers, 1946-’64, who are thought to be optimistic, ambitious and cooperative. After that are the Gen X’ers, 1965-’81, described as skeptical, self-reliant and risk-taking. Now we have the Millenials, also called Generation Y, who are described as tech-savvy, hopeful and empathetic. Generalities, of course. However, the specific traits of these 18 to young 30-somethings may already be impacting trends in financial practices and corporate strategies.
Many see this group as comprised of “creatives” in the job market, interested in technical innovation and independent, stylistic pursuits. These young adults are purportedly skeptical of religious, political, and financial institutions, but embrace communalism, companies with good citizenship and are connected to everything around them through social media and smart technology. They are health-conscious, value quality of life over material acquisitions and look to use their incomes to exercise professional control. Increasingly, the Millenials are looking to be entrepreneurial, telecommuting and flexible enough financially to be independent professionally. By 2025, statistics report that Millenials will make up 75% of the workforce, so these trends may play a significant role in how this country does business. Start-ups, working from home, and placing importance on job satisfaction over wealth acquisition are key aspects. Millenials also expect corporations to be increasingly socially responsible. There is strong brand loyalty as both consumers and job-seekers by this generational segment to companies who participate in solutions to social concerns. Many are starting their careers in the Peace Corps, Americorps, and Teach for America. Future job market trends show growth in technology, childcare/education and preventitive healthcare, so the Millenials appear well-positioned to take advantage of these trends.
In their financial lives, Millenials tend to be extremely cautious. They watched their parents and older generations adversely affected by the 2000 tech bubble and the 2008 recession and it has impacted the way they approach their financial planning. Many are distrustful of banks, think the markets are rigged and believe that technology from services like Google, Amazon, Apple, Paypal or Square will overhaul the system of banking access and financial management. Those that have conquered their residual student loan debts are uber-conservative in their asset allocation and prefer to leave large percentages in cash, rather than trust their savings to equities investing. This is a mistake, cautions many advisors, as the younger investor has the most to gain from balanced, long-term investment strategies. Millenials are understanding of the importance of saving generally and know they cannot depend on the past retirement ‘givens’ of pensions and Social Security. However, only around 13% seek advice from advisors and their conservative and independent approach to their finances keeps them from taking advantage of proven long-term investment opportunities.
In all, the stereotype of the Millenials seems positive… innovative, socially responsible, and fiscally conservative. In pursuit of their long term success, we hope the Millenials develop another trait: recognizing the benefit of sound financial advice.