Data & Research September 6, 2018

Millennials Overestimate Amount Needed to Start Investing

A survey revealed that 46% of Millennials think you need at least $1,000 to start investing, and 17% think you need $10,000.

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There is a gap between Millennials’ knowledge about investing and their behavior, Twine, a savings an investing app backed by John Hancock, learned in a survey. Although 44% of Millennials have a strong understanding of investing, with that percentage passing a quiz on the topic, 46% are not saving outside of a 401(k) account.

 

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“It’s really promising to see young adults learning about investing and communicating about it with others,” says Uri Pomerantz, CEO of Twine. “The next step is shifting the mindset around investing by starting with small changes in behavior. It doesn’t take a financial adviser or a large sum of money to get started. There are many entryways into investing that can help people grow their wealth and meet their financial goals, regardless of prior knowledge, current net worth or previous money missteps.”

 

The survey also revealed that 46% of Millennials think you need at least $1,000 to start investing, and 17% think you need $10,000. Twine says there are a variety of services and platforms, including its own, that allow people to start saving with as little as $5 and investing with only $100.

 

Nearly 80% of Millennials who invest outside of a 401(k) talk to their friends about their finances.

 

More than twice the number of Millennials indicated they are distracted from their financial goals by spontaneous weekend trips with friends or clothes and jewelry shopping than their Gen X counterparts. Eighteen percent said they would take on an additional job to meet a financial goal, and 23% would work overtime.

 

Millennials rely on the Internet for information about investing, more so than friends, a robo adviser or a financial app.

 

Equation Research conducted the survey among 1,013 people in July.
The Markets September 6, 2018

Many Asset Managers De-Channel Their Salesforces

They see the differences between wirehouses, broker/dealers and registered investment advisers blurring.

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A number of asset managers are reassessing the way their wholesaler maps are drawn because of the blurring of channel lines between wirehouses, independent broker/dealers and registered investment advisers (RIAs), according to Cerulli Associates. In fact, 69% of asset managers operate with a primarily de-channelized salesforce.

“Just 53% of practices with assets under management between $50 million and $100 million insource their investment decision making,” says Ed Louis, a senior analyst at Cerulli. “However, this number jumps to more than 70% for those with $250 million or more in AUM [assets under management].

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“These practices are increasingly made up of adviser teams with specialized roles, a systematic investment process, and a focus on providing holistic financial planning and wealth management services,” Louis continues. “Additionally, the lines that historically divided the broker/dealer channel are blurring as these trends around teaming and planning move downmmarket. While these adviser teams offer their own unique value proposition to clients, the biggest difference can often lie in how they leverage home-office infrastructure.”

Cerulli says that since asset managers are finding that top clients and prospects all exhibit similar behavior, it is more efficient for them to invest in a single, sophisticated professional to manage those relationships in a region.

“The ability that asset managers now possess to leverage data analytics makes it easier to identify and focus wholesalers’ efforts on those key opportunities of advisers who insource portfolio construction and away from less productive opportunities,” Louis says. “The majority (74%) of asset managers currently employ dedicated data analytics staff.”

Asset managers that currently do not have data analytics staff are in the early stages of building those capabilities, Cerulli says.

A second area that asset managers are investing in is specialist resources that wholesalers can call on to engage more deeply with their advisers. These include thought leadership, practice management programs and portfolio construction services.

Additional findings and information about how to obtain Cerulli Associates research are available here.

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