Industry Surveys

Today's Millennial Investors Have "Depression Era Mentality" - UBS Survey

Eliane Chavagnon, Editor - Family Wealth Report, January 28, 2014


This “Depression era mentality,” combined with financial advice from family, is turning the Millennials into a generation of savers who are skeptical about long-term investing and market-chasing, says UBS.

Millennial investors, defined in UBS Wealth Management America’s latest Investor Watch report as individuals aged between 21 and 36, are the most fiscally conservative generation since the Great Depression, according to the firm.

This “Depression era mentality,” combined with advice this cohort of investors get from their families, is turning them into a generation of savers who are skeptical about long-term investing and market-chasing, UBS said. 

The implications for the wealth management industry are significant as financial advisors targeting this segment may want to re-evaluate their client prospecting techniques, as well as consider the relevance and suitability of their offering for different investor demographics. Both soon-to-be millionaires and millennials who already are
represent a significant opportunity for those in the business of
managing people’s wealth and advising on wealth-related issues -
although understanding the mindset and various preferences of these
segments is crucial (view related article here).

For example, the findings also resonate with insights from an Accenture report earlier this year, which said that millennial investors are more conservative and less trusting of financial advisors than Baby Boom and Gen X investors. They’re also more inclined to consult other sources before accepting financial advice, it said.

UBS' latest report revealed that 34 per cent of millennials describe their risk tolerance as either conservative or somewhat conservative, while their average asset allocation is extremely conservative; the average portfolio dedicates 52 per cent to cash, compared to 23 per cent cash among other investors. Additionally, the majority said saving was “the best financial advice they had received,” while other generations said investing was the best. For instance, only 28 per cent of the millennial respondents said they viewed long-term investing as a route to success and are more focused on meeting their own goals than a specific market return.

“Millennials seem to be permanently-scarred by the 2008 financial crisis,” said Emily Pachuta, head of investor insights at UBS Wealth Management Americas. “They have a Depression Era mindset largely because they experienced market volatility and job security issues very early in their careers, or watched their parents experience them, and it has had a significant impact on their attitudes and behaviors.”

Register for FamilyWealthReport today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes