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The millennial mindset

By Daniel Bardsley

Their outlook shaped by the global financial crisis, Millennials have a cautious outlook but are keen to have a positive effect on the world. Advisers have to engage these upcoming members of ultra-high net worth families on their terms, explains Ned Dane, senior vice president and head of OppenheimerFunds' Private Client Group

What was the purpose of carrying out this study?

One of the biggest challenges affecting families is the transition of wealth to the next generation and issues around the purpose of their wealth and family values. We wanted to make an investigation focused on the next generation and how they think about their wealth, their investments, and their engagement with their advisory committee.


What is notable about the priorities of the Millennials?

What was not very important to this group, those born between 1980 and 1995, was doing good to feel good. They want to improve the human condition. It's less about how it makes them feel and more about the impact. If they invest for impact, they want to be able to measure and sustain that impact, they want to be able to see the financial return and social return. Perhaps they're different from their parents' generation, where the feel-good factor was a lot more important.


The research indicates that Millennials are more conservative in their investment decisions than their parents. Why is this the case?

Their adulthood has been framed by what I would consider two major market cataclysms — the collapse of the tech bubble in 2000 and the global financial crisis of 2007-08. Their parents came along in a much more long-running bull market in equities and their mindset is, if you look long term, it will be fine. That's not the experience of this millennium because this group haven't had that broad positive view of investments.


What key message for advisers comes out of the research?

For the advice community to engage the next generation, they need to engage on their terms - one-on-one, to help understand their personal values, which might be different from the broader family. They have to help expand their financial literacy, so they're comfortable and prepared for the wealth transfer. Millennials have a strong appetite to engage this way. They also wanted help with wealth transfer, resolving conflicts, and deal sourcing. In spite of their professed conservatism, we discovered that Millennials are looking for help in sourcing deals. They want advisers to guide them in connecting the dots between the causes they care about and opportunities to advance those causes.


How might this work in particular cases?

For example, if they're passionate about preserving our finite water resources, they're looking for advisers to say 'How do you invest in a way that's aligned with this interest?'. That's a very different skill-set for advisers, different from appropriately allocating assets to various asset classes. With impact investing, you still need to accomplish that, but with the added dimension of seeking underlying investments within those asset classes that are aligned to the causes/issues that the investor deems important. When [advisers] take the time to see what's important to Millennials, and think about opportunities aligned to that, that's a good path to long-term alignment.


What notable characteristics do these ultra-high net worth Millennials show?

With these Millennials there's much more patience. They understand things take time. In these families perhaps they might be the second generation, they might be the sixth generation. They can see the long horizon of those who came before them. They understand they will have, in time, a more important seat at the table. They're satisfied with their role today in having a voice but not making strategic decisions. They exhibited a greater degree of patience than popular research into the millennial generation might suggest.


Was there anything particularly surprising about the results of the research?

What I found surprising was this issue around personalised advice as opposed to digital advice. There's talk of robo-advisers ... using sophisticated investing algorithms. These strategies have raised tens of billions of dollars in a very short period of time — it's post-financial crisis capitalism with the wired generation. My thought was that there would be a high resonance with [wealthy] Millennials, but it really wasn't [the case]. That really wasn't as important as human interaction. Maybe the stakes are higher in wealthier families and you don't want to trust it to a black box. For engaging advice, they were more interested in working with trusted advisers than with a black box algorithm. In this, they're possibly different from the broader millennial generation. 

Interested in receiving the report? Visit campdenresearch.com

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