Here Come the Millennials

Transcription

1 Here Come the Millennials A Behavioral Finance Discussion Omar Aguilar, Ph.D. Chief Investment Officer, Equities June 27, 2016

2 Agenda Millennials Demographics Preferences Investment Decision-Making 2

3 Demographics Generations When most of the generation was years of age born after 1980 Generation Age in 2014 Millennials ages Xers ages Boomers ages Silent ages Illustrative research sample. Source: Pew Research Center, February

4 Demographics Generational populations in 2015 Millennials represent the largest generation to date 5 Pre- Employment 4 Retirement Population in Millions Million Millennials 65 Million Generation Xers 74 Million Baby Boomers 27 Million Silent Age in Years Source: The Boston Company Asset Management, LLC, Eight Investment Themes for Global Growth, May

5 Demographics Millennials are the largest generation in the U.S. to date! 80,000,000 Source: Pew Research Center, January

6 Demographics Collective annual income will exceed Baby Boomers by 2018 Millennials already possess over $200 billion in direct spending power $30 Trillion Wealth transfer over the next 30 years Source: Boston Consulting Group, September Accenture, The Greater Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth,

7 Demographics The gender wage gap is historically narrow Millennials Female Earnings Compared to Male Counterparts General Population 93% versus 84% Illustrative research sample. Source: Pew Research Center, December 2013 Millennial women are 7% more likely to hold a bachelor s degree or be enrolled in college than millennial men 7

8 Demographics Debt and underemployment are persistent challenges Debt Millennials carry an average of $30,000 in student loan debt Underemployment It is taking four years longer to achieve the median-wage annual income of $42,000 when compared to those who came of age in 1980 Source: Consumer Financial Protection Bureau, October

9 Agenda Millennials Demographics Preferences Investment Decision-Making 9

10 Preferences On average, millennials spend 18 hours a day using media 81% Own a smartphone Mostly use a mobile device 90% Use social media 9/10 use online banking Retail Apps Discount Apps Peer-to-Peer Payments Service Apps On average, they spend 18 hours a day consuming different types of media Illustrative research sample. Sources: Corporate Insight, The Millennial Shift: Financial Services and the Digital Generation,

11 Preferences Millennials social nature should not be ignored Social Media Socially Conscious Brand-Image Awareness Value Opinions of Family and Friends Each of the trademarks on this page are the property of their respective owners. Use of them does not imply any affiliation with or endorsement by them. 11

12 Preferences Millennials share a social conscience 87% recycled 72% educated family and friends about a cause 90% donated money 63% volunteered time Illustrative research sample. Sources: Cone, The Millennial Generation: Pro-social and empowered to change the world,

13 Preferences Social and environmental commitment For 68% of millennials a company s social and/or environmental commitment is important or extremely important when deciding which products to buy Illustrative research sample. Sources: Cone, The Millennial Generation: Pro-social and empowered to change the world,

14 Agenda Millennials Demographics Preferences Investment Decision-Making 14

15 Biases are different by generation Millennials Have Lived Through Many Different Market Cycles Bull Market Cycles High School College Job Market Family Illustrative research sample. Source: Bloomberg, CSIM, December Past performance is no guarantee of future results. An investment cannot be made directly into an index. 15

16 Investment Decision-Making Millennials are risk averse According to a 2012 ICI survey 22% of millennials who owned mutual funds said they would only invest in financial instruments with no or below-average risk Cash is the preferred investment option Another survey showed that 39% of millennials said cash was their preferred investment option* *for money they didn t need for at least 10 years (Bankrate.com, July 2012) Source: ICI Annual Mutual Fund Shareholder Tracking Survey, November 2012; Bloomberg Business News, August 4,

17 Investment Decision-Making Millennials are taking action for retirement Age When Savings Commences and are optimistic about their future Millennials Gen X Baby Boomers What do you anticipate having in savings for your retirement? Age $2.5 million Age $850 thousand Age $260 thousand Source: Merrill Edge Report: Spring

18 Investment Decision-Making Call to Action: Working with millennials Low Risk Education Financial education can help transition from risk aversion to risk awareness Low cost Socially conscious Actions Provide them with tons of data Post or share relevant articles, videos or commentary Technological Innovation Transparency Preferences and Value Cost-conscious and purpose investing provide foundations for longer relationship Actions Post or share information about causes you and they care about Source: CEB Iconoculture Consumer Insights, Inside the Millennial Mind: The Marketer s Handbook,

19 Investment Decision-Making Call to Action: Working with millennials Low Risk Technology Embrace technology and increase transparency Low cost Socially conscious Actions Use charts, graphs or pictures to explain concepts Ensure you can read and understand mobile device content Use Skype, FaceTime or Google Hangout Technological Innovation Transparency Interactions Millennials have different ways to communicate Actions Consider places millennials love Connect by sharing the experiences of current clients Utilize interactive tools to guide conversations Consider junior advisors that can work with peer clients Each of the trademarks on this page are the property of their respective owners. Use of them does not imply any affiliation with or endorsement by them. The Apple logo is a trademark of Apple Inc., registered in the U.S and other countries. Source: CEB Iconoculture Consumer Insights, Inside the Millennial Mind: The Marketer s Handbook,

20 Important Disclosures Information and data provided have been obtained from sources deemed reliable, but are not guaranteed. Past performance is no guarantee of future results. makes no representation about the accuracy of the information contained herein, or its appropriateness for any given situation. Unless otherwise noted, the opinions expressed are those of, Inc., are subject to change without notice, and are not intended to serve as investment advice, a recommendation, offer, or solicitation to buy or sell any securities, or recommendation regarding specific investment strategies. Some of the statements in this document may be forward looking and contain certain risks and uncertainties. 2016, Inc. All rights reserved GKNH 20

21 Thank you