Millennials are much more likely to make risky investment decisions compared to other Americans by reacting to short-term market volatility – and they appear to be doing it on their own, according to a new survey.
According to new research from Massachusetts Mutual Life Insurance Co., a third of Millennials (32%) said they were moving more of their retirement savings into stocks and equities to benefit from future growth – even as another quarter of Millennials (25%) said they are moving more of their savings into fixed-income investments such as bonds or money market accounts due to recent stock market activity.
Millennials were, however, almost twice as likely than the general population to rely on their employer’s educational programs and resources to guide them when investing and allocating their retirement savings. They are also more likely to already be using (or perhaps defaulted into?) investment strategies such as managed accounts that automatically allocate investments based on an investor’s age, risk tolerance or other factors.
The ‘Advice Gap’
Perhaps not surprisingly, the study found that while about a third (32%) of Americans polled said they relied on a financial advisor to guide them in making decisions about investments, there was a real generation (or perhaps account balance size) gap in using financial advisors. While two-thirds (62%) of those ages 65 or older said they relied on professional money advice, a mere 8% of Millennials did.
The study found that one in 10 Americans admitted to being uncertain about how to invest their retirement savings, with Millennials twice as likely to be uncertain. The older the investor, the study found, the more certain he or she was about how to invest.
PSB conducted the MassMutual Retirement Savers Study on behalf of MassMutual as part of an omnibus survey among 1,002 respondents fielded April 3-10, 2017. The results shown here reflect the 450 Americans who currently have a 401(k) plan and/or other retirement investments.
