Are We Overrating Millennials?
Millennials are a hot topic in the industry. We have done multiple millennial-centric projects this year, and every day seems to bring another conversation focused on the same set of questions:
- How can we help millennials overcome their conservative, fearful attitudes about investing?
- How should we leverage their (self-stated) interest in socially-responsible (ESG) investments?
- And most importantly, how do we make sure we capitalize on the $41 trillion (or is it $59 trillion?) in wealth they will inherit over the decades to come?
This has made for interesting discussion and interesting work. Yet at the same time I can’t shake the feeling that the importance of millennials to asset managers over the next 10 years is being overrated.
Consider a simple, but related, question: why don’t asset managers have a clear engagement strategy for Gen X? I mean, Gen X are older, have higher incomes and more wealth, and also stand to inherit trillions in wealth. (Though to be fair they’re equally bad at managing their finances.)
I think the answer is that “Gen X” have just become “investors”. Some have money, some don’t. Some will end up wealthy, some won’t. And some are engaged with advisors and asset managers, others aren’t.
Their collective attitudes and traits have, over time, started to matter less. Firms don’t think about Gen X because they’re not worried about targeting and engaging a generation; they need to target and engageprofitable clients.
What Gen X was to asset managers in 2005 is what millennials are today: interesting to analyze and project, full of (very) long-term potential, but unlikely to retain relevance as a generic label/group 10 years from now.
This is not to say there aren’t interesting business challenges lurking within the millennial discussion. For example, how can/should firms help advisors retain their clients’ heirs as wealth transfers across generations? These are the types of questions that take precedence over direct millennial engagement, at least for now.
Image via PhoenixUrbanSpaces.com.