Busting Stereotypes: Millennials Take Control of their Finances

Columbus, OH– The Millennial generation (aged 26-41) has been pegged with stereotypes of careless spending and saving habits since the early 2010s. However, with the oldest members of this generation now entering their 40s, they are busting out-of-date perceptions by applying what they’ve learned after living through past financial crises.

The seventh annual Advisor Authority study powered by the Nationwide Retirement Institute® found that Millennials (with investable assets of $100,000 or more) reported that the 2008 Financial Crisis (23%) or the 2020 Global Pandemic (33%) were the event that had the most profound impact on them. These events have made them more cautious, proactive and confident in the way they face the future.

Nearly eight in ten (79%) Millennials are concerned about a U.S. economic recession, compared to 71% of Generation X and 63% of Baby Boomers. Despite high levels of concerns, Millennials feel more prepared to address unforeseen events than their older counterparts. More than half of Millennials (56%) are confident in their ability to protect their finances and investments should another crisis occur, compared to only 43% of Generation X and 33% of Baby Boomers. In fact, Millennials’ financial outlook for the next twelve months actually grew more optimistic to 54% in 2021 from 38% in 2020, exceeding Generation X (49% from 40%) and Baby Boomers (45% from 33%).

“Compared to other generations, Millennials have lived through more formative events, including three significant financial crises, in a short time span. Those disruptions have increased their awareness of the importance of planning for the unexpected and taking ownership of their financial futures,” said Kristi Martin Rodriguez, leader of the Nationwide Retirement Institute. “Our data shows the old stereotypes are either untrue or out of date. Millennial investors are focused on taking steps to achieve financial stability now while preparing for unforeseen events on their way to a secure retirement.”

Millennials also adopted healthy habits based on the financial crisis that had the most impact on them, with 31% establishing and following a budget and 28% starting an emergency fund. They are also prioritizing risk mitigation strategies. After living through the pandemic, 83% of Millennials have a strategy in place to protect against market risk, an increase from 71% in 2020.  

As Millennials continue to apply what they’ve learned from living through past financial crises and seek financial stability, it’s become particularly important for advisors and financial professionals who hope to grow their practices to understand their needs and attitudes. More than four in ten advisors or financial professionals (41%) say that Millennials will be their primary target for new clients, compared to 29% in 2020.

Millennials are proactively planning for retirement
Three-fifths of Millennials (60%) are confident in their ability to prepare for and live in retirement based on their experiences living through past financial crises. Further, over three-quarters of Millennials (78%) have a strategy in place to protect against outliving their savings and those who have a strategy will do so by leveraging Social Security (47%), in-plan income guarantees (38%), dividend yielding stocks (31%), and longevity insurance/deferred income annuities (31%).

Millennials’ prioritization of risk mitigation strategies for short-term protection have carried over to their long-term planning as well. In fact, more Millennials are likely to choose an annuity to protect against market risk (85% in 2021 vs. 72% in 2020) than before. Millennials are also actively seeking the advice of financial professionals, with 66% already working with one.

Opportune time for Millennials to broaden their financial support groups
Despite the best-laid plans, financial crises did cause some Millennials to make choices that could have a negative long-term impact. For example, nearly one-third of Millennials (30%) liquidated assets from their qualified retirement savings plan to cover financial obligations during the financial crisis that had the most profound impact on them.

This is a prime opportunity for advisors or financial professionals to start building relationships with the 34% of Millennials not currently getting financial advice to help them avoid emotional decisions in challenging moments and focus on meeting near and long-term financial goals. As one-third (33%) of Millennials who work with a financial professional say they do so to feel more secure about their financial future, advisors can help Millennials avoid detrimental decisions while guiding them towards solutions that offer protection and a sense of security.

“Millennials are experiencing a financial awakening and it is so important that advisors and financial professionals start preparing to serve their unique needs,” said Rodriguez. “Those who can establish long-term relationships with Millennial clients have a tremendous opportunity to grow their practices and help the next generation prepare for a secure retirement.”

For additional insights on this survey data, https://nationwidefinancial.com/media/pdf/NFM-21979AO.pdf.

Nationwide’s seventh annual Advisor Authority study powered by the Nationwide Retirement Institute® explores critical issues confronting advisors, financial professionals and individual investors—and the innovative techniques that they need to succeed in today’s complex market. This is the fourth in a series of ongoing releases from the seventh annual study.

About Advisor Authority: Methodology
The seventh annual Advisory Authority Survey was conducted online within the United States by The Harris Poll on behalf of Nationwide from July 22 – August 17, 2021 among 1,632 advisors and financial professionals and 839 investors, ages 18+. Among the 839 investors, there were 34 Gen Z (ages 19-25), 179 Millennial (ages 26-41), 209 Generation X (ages 42-57), 355 Baby Boomers (ages 58-76), 62 Matures (age 77+).  Investors are weighted where necessary by age by gender, race/ethnicity, region, education, income, marital status, household size, investable assets and propensity to be online to bring them in line with their actual proportions in the population. Respondents for this survey were selected from among those who have agreed to participate in Harris Poll surveys. Because the sample is based on those who were invited to participate in Harris Poll online research, no estimates of theoretical sampling error can be calculated.

About The Harris Poll
The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas: building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com.