An article in TIME magazine questions whether Millennials are making the right decisions with regards to their personal finances. Click HERE to read the full version. I’m with the Millenials on some of their instincts but let’s start with the argument put forward in TIME.
Our youth have a strong work ethic and more so than my generation, they understand the importance of having a nest egg for the future. But, the problem is that they don’t trust financial institutions. Instead, the “Facebook generation” turn to each other for advice on money. Three quarters ask their peer group what to do. This is at a time when 61% of young people aged 25 to 34 still need parental financial support, 45% use their credit card for essentials, 28% have been at the receiving end of a bill collector and nearly a quarter have missed a debt repayment.
So why do they turn to each other and not a professional? Well, they’re the social media generation and very used to consulting their peer group on all matters. They also feel betrayed by the mainstream world of big money after the Credit Crunch ruined their job prospects. Not only are they unlikely to turn to a financial adviser for words of wisdom – but according to one Wall Street source, 90% of Millennials would fire their parent’s financial adviser if they had the chance. Click HERE to see that televised interview with said Wall Street chap.
There is a certain amount of tut-tutting going on from personal finance commentators about the approach of Millennials but is it really so bad? I started my career in journalism twenty years ago writing for a trade paper targeted at Independent Financial Advisers. I reported on endless misselling of inappropriate products, scandals like Barlow Clowes and Levitt, terminations and suspensions of firms by the regulator and commissions that destroyed returns to investors. I’ve spoken to well respected people in the City of London who’ve stated that their cat would make better investment decisions than many fund managers with their paw on an open copy of the Financial Times. If the appalling complacency and arrogance of some in the sector is challenged by Millennials – and rogues and under-performers are named and shamed on social media – couldn’t that lead to a general raising in the standard of financial advisers in the future?
- Millennials Are Growing Up – But They’re Still Making One Huge Mistake (business.time.com)
- Millennials approach money differently (globalnews.ca)
- Millennials May Not Be Able To Retire Until Age 73 (businessinsider.com)