Overcoming Market Skepticism to Reach and Advise Millennials

Written by CUNA Mutual Group Annuities

Millennials are poised to be roughly 50% of the U.S. workforce by 2020 and 75% of the global workforce by 20301. As the first generation to grow up with the Internet, cell phones and cable TV, the 77 million-plus individuals in this group are generally defined as early adopters of technology2, forward thinkers in corporate and entrepreneurial pursuits and they fully expect to be better off financially than their parents3.

However, despite the progressive traits ascribed to Millennials and the broad presumption that they are comfortable with taking risks, a recent Deloitte survey reflects that this generation is seeking stability in an uncertain world4. It’s a paradox that’s evidencing itself in how Millennials are approaching investing and saving for retirement.

Millennials and Market Skepticism

In U.S. Retail Investor Products and Platforms 2017: Retooling for the Modern Investor, Cerulli Associates reports that 80% of investors younger than 40 prefer portfolio protection and actively avoid market risk, willingly accepting underperformance in the market to guard against potential major losses5. Given the 2008 financial crisis and market collapse, and the bursting of the Internet stock bubble eight years earlier, the fear of risk is warranted in Millennials’ minds— causing them to hang onto their cash instead of entertaining even a conservative investment strategy6 to prepare for retirement.

When market volatility rules the day, as it did in 2000 and 2008, there’s cause for concern. But, flash forward to the present market performance. How do advisors speak to a generation of people not necessarily open to hearing the benefits of leveraging a bull market?

Talk It Out

Like any other clients, reaching Millennials starts with earning their trust. Interestingly, despite being comfortable with the notion of robo-advisors, the majority of this generation finds security in talking face-to-face with an advisor7 about their goals and their future. However, that doesn’t mean they’re ready to talk investing as soon as they walk through your door.

Given their age, saving for retirement may not be a top of mind investment motivation for Millennials, so don’t jump into the deep end during initial conversations. Instead, help them better understand themselves and their attitudes toward money. For example, ask questions (Opens in a new window) that reveal their fears about advisors, investing and retirement. Their answers may be illuminating for both of you in terms of tolerances. It also helps you align products and strategies with their mindsets, such as risk control annuities for those who harbor fears about market volatility.

Growing up with financial calamities that shaped their general perceptions about the market, Millennials may continue to exercise caution around their finances—and that could mean not actively reaching out to you. There’s no need to remain passive, as you may already have access to advice-ready Millennials through your current clients.

Find out how to engage and provide guidance for beneficiaries using our easy-reference infographic, Continuing Relationships With The Next Generation (Opens in a new window).

How to Talk With Investors During Each Phase of Life

As you age, it’s easier to reflect back on phases of life. There are financial phases in life too.

Practical Tips for Understanding and Connecting With Millennial Investors

Each generation forms a new attitude toward investing. Get insights into the millennial investment attitude.

What Matters Now: Insights from Millennials

Learn what matters most to the millennial generation (ages 18-34) and how to serve them.