Wealth management firms are trying to get millennials excited about investing and hope to win their trust — and the sizeable wealth they are expected to control in the future.
Those now 21 to 31 years old will control $9 trillion in assets by 2018, and that will continue to grow, Deloitte estimated. Millennials also stand to inherit some $36 trillion by 2061, according to Boston College’s Center on Wealth and Philanthropy.
“We have a huge generational shift in wealth coming up,” Tom Nally, TD Ameritrade Institutional’s president, told Reuters recently. “We want to make sure our advisers are ready to serve next-generation investors.”
But it could be a tough sell: Millennials tend to leave their parents’ advisers when they inherit money, and they are leery of stocks. They “are the most conservative generation since the Great Depression,” reported a January UBS Wealth Management study, which found millennials keeping 52 percent of their savings in cash, compared to 23 percent for other generations.
To be sure, millennials are trying to save for homes, pay down student loans and pay the bills that come along with young adult lifestyles. But millennials tend to be distrustful of the traditional financial planning industry, even when they have money to invest.
“They don’t want to hear a sales pitch,” said Michael Liersch, head of behavioral finance at Merrill Lynch, the brokerage unit of Bank of America. Roughly 40 percent of millennials disagreed with the statement “advisers have your best interests in mind,” according to a Wells Fargo & Co survey.
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To appeal to younger clients, regional brokerage Raymond James Financial is training more new college graduates to be brokers. It will “exponentially” expand its current level of 100 participants over the next three to four years, Tash Elwyn, president of Raymond James’ private client group, said in an interview.
Morgan Stanley runs investment educational programs aimed at clients’ children who may someday need help managing inheritances. It also beefed up its social-impact investing to appeal to conscientious millennials, said Doug Ketterer, head of strategy and client management for Morgan Stanley Wealth Management.
Online broker TD Ameritrade runs TD Ameritrade U, an online program that teaches college students investing strategies and how to use the brokerage’s thinkorswim trading platform. It also offers clients recommendations from LikeFolio, a youth-friendly startup that generates sample portfolios based on what’s popular on Facebook and Twitter.
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“(These platforms) pique interest and expose millennials to investing,” said Nicole Sherrod, managing director of active trading at TD Ameritrade. “It goes back to the ‘invest in what you know’ concept.”
That concept may be the one that wins over millennials like Kenny Quick, a 25-year-old Tampa, Florida, advertising executive, who bolsters his workplace retirement plan by skipping the advice and buying shares of companies he knows through deep discounter Scotttrade, Inc.
“I hold stock in Chipotle,” Quick said. “I feel like I eat there all the time, so investing in them felt like the next step.”