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Millennials’ Unexpected Retirement Savings and Advice Preferences

Despite assumptions that Millennials are not focused on saving for retirement, a new study uncovers unexpected wealth management trends among the generational cohort.

According to a national study conducted by the Center for Generational Kinetics on behalf of Broadridge Financial Solutions, a large majority of Millennials say they are actively saving and prefer more regular communications with financial advisors, even though most admit they are not working with one.

In fact, two-thirds of Millennials surveyed report that they are actively saving for retirement, while nearly 70% of respondents acknowledge they are not currently working with an advisor.

“Millennials are open to receiving investment advice and planning for retirement,” notes Cindy Dash, Head of Broadridge’s Matrix Financial Solutions. “The results of the study show a clear opportunity for financial advisors to utilize technology-enabled solutions to better educate and communicate with all generations, including Millennials.”

Personal Preferences

Notwithstanding the perception that Millennials operate strictly in a digital world, the findings show that this group finds in-person meetings and phone calls to be the best way to build trust with a financial advisor. Only 17% of Millennials view texting and only 9% view social media as trust-building communications.

In addition, 67% of Millennial respondents prefer communication from a financial advisor at least monthly, while 28% prefer contact on a daily or weekly basis.

Of the survey respondents, 55% indicated they would consider or use their parents’ financial advisor, but only one in five Millennials whose parents have a financial advisor have actually met their parents’ advisor. Broadridge notes that Millennials are the only generation found to trust retirement advice from family and friends more than advice from a financial professional or advisor.

When asked about preferred financial advisor traits, Millennials say that their first priority is experience, albeit less so than older respondents. Compared to older generations, Millennials are more likely to seek advice from a professional who has similar demographic qualities as themselves, such as gender, socio-economic status and financial history.

Savings Vehicles

Millennials are more confident investing in savings accounts than workplace retirement plans, tax advantaged plans or real estate, according to the findings. In contrast, older survey respondents are most likely to trust workplace retirement plans and tax advantaged plans.

“Millennials would rather put their money in a savings account than a workplace retirement plan, effectively ‘pushing pause’ on the potential for qualified plan growth,” Dash noted. “This demonstrates a significant need for financial guidance. The good news is that advisors don't need to completely reinvent the wheel to meaningfully engage the next generation of clients. They just need to know and take action on what Millennials actually want,” she further emphasizes.

Health savings accounts (HSAs) apparently are also a “blind spot” for Millennials. The findings show that more than half of Millennial respondents are interested in HSAs, but only one-third are taking advantage of them. Moreover, 43% of Millennials surveyed are not familiar with HSAs, highlighting another opportunity for advisors, the authors note.

“By delineating what is specific to Millennials and what rings true for Americans across generations, we’ve uncovered significant, immediate opportunities for financial advisors to grow their practices,” explains Jason Dorsey, President of The Center for Generational Kinetics. “The key is that financial advisors need to evolve their practices starting today — and adapt along with technology and communication trends — to build trust and benefit clients and prospects.”

The study included a 25-question survey conducted July 10-16, 2018, administered to more than 1,000 U.S. respondents ages 22-59, weighted to current census data for age, region and gender.