There is “a paradigm shift” in how younger people are approaching money management, observes Reuters Money editor Beth Pinsker.
There is “a paradigm shift” in how younger people are approaching money management, observes Beth Pinsker, Reuters Money editor and contributor to The Wall Street Journal and The New York Times in an interview with Spectrem’s Millionaire Corner. She is seeing a more self-directed generation that is employing technology to manage their personal finance and portfolios.
“They’re not going to use the same kind of broker-dealer services their parents used,” she says. “They will use (traditional brokers) for fee-only planning services every once in a while when they can’t figure stuff out. They’ll say, ‘I need a checkup like when they go to the doctor and they will ask, ‘What am I doing right, what am I doing wrong?’ They’re going to get a financial road map, which is the smart thing and what they should do. Then they’re going to implement those changes probably on their own in some technology based system or go to one of the new services that does it for them online.”
Young households surveyed by Spectrem’s Millionaire Corner have a heightened confidence in their investment acumen. They are more likely than previous generations to attribute their financial success to themselves rather than a financial advisor. Non-Millionaire investors under the age of 45 with a net worth of at least $100,000 (not including primary residence) control 70 percent of their assets without any professional help, compared with Baby Boomers ages 55-65 who control 52 percent.
Nearly three-in-ten (vs. just 17 percent of Baby Boomers) say they have a portion of their investments with an advisor to compare the results of their own investing.
Not that they don’t have a high regard for professional financial advisors. More than half (53 percent) consider them to be professional and knowledgeable (compared with 49 percent of Baby Boomers). They just feel they could do a better job of investing their money (39 percent vs. 28 percent of Boomers).
Financial advisors will have to adjust to the new more independent mindset among Millennials and Gen Xers, Pinkser tells Millionaire Corner. “(Younger investors) are not going to use services where they feel someone is taking commission and trying to sell them something,” she states. “I think that’s just really out of vogue with people of any generation below the Baby Boomers. (They) just don’t trust when they have to turn over a yearly fee to somebody. Financial advisors will have to adjust the way they approach people when they offer services. It will be a matter of, “Here’s what I’m offering for value, rather than what they used to do, which is, ‘You can’t manage your money on your own. You have to give it to me, and here’s what I charge.’”
Financial service providers do seem to be getting the message,” Pinsker observes. “Firms are offering an online ramp to account aggregation. They are interchangeable to me at this point. It doesn’t matter who pays attention (to their money) as long as somebody does.”
Related story: “They’re just trying to win the game of life”: An interview with Beth Pinsker
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.