Have you seen the latest research published by LinkedIn about Affluent Millennials? It’s pretty incredible. This generational subset is comprised of individuals born from 1981 to 1997 with at least $100,000 in investable assets, excluding real estate. These powerful consumers spend a staggering $2 trillion every year. In addition to the wealth they will build on their own, in the coming years they will also be on the receiving end of a massive generational shift of approximately $59 trillion in personal wealth.
Bottom line: this powerful generational subculture will drastically change the financial services industry around the world. How can financial services navigate these massive changes?
LinkedIn and Ipsos recently conducted a global study of approximately 9,200 Millennials to answer this question, focusing in particular on the 1,507 respodents from the United States. What LinkedIn’s study found is that the financial behaviors of Affluent Millennials are vastly different from those of their immediate elders, Affluent GenXers. Additionally, there are startling differences between general Millennials and those defined as Affluent. A whitepaper presenting all the findings of LinkedIn’s Affluent Millennial study is available now, but here are some of the highlights that I found to be most interesting.
How Do Affluent Millennials View the Future of Finance?
They Envision a VERY Different Future
According to the study, Affluent Millennials have a unique view of the future – one that is sure to demand drastic changes to the finance industry. They envision a – get this – cashless economy based on SHARING where banks no longer serve as their primary financial institutions. Wow. That’s some food for thought.
They Sacrifice Today for a Brighter Tomorrow
Affluent Millennials are willing to do whatever it takes to secure their reams for a brighter tomorrow. 72% of Affluent Millennials agree that making sacrifices today will pay off later on down the line.
They Dream Big Dreams
One reason for their willingness to make sacrifices today is the shared dream among many Affluent Millennials: becoming business owners. Affluent Millennials are three times more likely than Affluent GenXers to have the goal of owning a business. Many already appear to be in pursuit of that goal, with 35% of all Affluent Millennials currently holding a business loan.
How Are Affluent Millennials Preparing for Their Future?
They’re Diversifying Income Sources
Affluent Millennials have much more diverse sources of wealth, as compared to the generations that came before them. While 52% of Affluent GenXers count on their employer as their primary source of income, only 19% of Affluent Millennials do the same. Instead, they build wealth with a diverse mix of investments in personal or family businesses, through income properties, or through inheritances.
More debt …but also more saving.
Two-thirds of Affluent Millennials have at least one loan, other than a mortgage. Compare that with Affluent GenXer – only half of them hold a loan other than a mortgage. What forms of debt are Affluent Millennials taking on? Credit cards (67%), personal loans (43%), student loans (43%), and business loans (35%).
In spite of their debt, Affluent Millennials are saving quite a bit. They are almost three times as likely to save more than half of their paychecks each month. More than a third of them put the majority of each paycheck into savings, vs. just 12% of Affluent GenXers who say they do the same.
Seeking Control, Valuing Advice
Affluent Millennials have a strong desire to control their finances. They want to conduct their own research, make their own investments and execute their own financial strategies. This desire for independence is already demanding changes from financial firms and shifts in the way they do business.
Interestingly, the study also found that 87% of Affluent Millennials view financial advisors as either “nice to have” or as a “must-have”. So although these individuals crave independence with their savings and investments, they also value expert advice and professional guidance to help make decisions.
Thinking Outside the Finance Box
Two out of three Affluent Millennials are open trying financial products or services offered by brands NOT within the financial services industry. That’s 12% more than general Millennials and 21% more than members of GenX. This demonstrates that Affluent Millennials are looking for the best products to suit their financial needs and personal preferences, regardless of brand history or reputation.
And here’s another frightening thought: the study found that Affluent Millennials are three times more likely to trust the financial institutions they choose to work with. This means once the business is lost, it’s likely to be lost for good.
What Are Affluent Millennials Seeking in a Financial Service Providers?
Social-Centric Financial Decisions
LinkedIn’s research demonstrates what many of us already knew: Millennials are a social-centric generation. More than half of Affluent Millennials consider social networks to be a “must have” in the financial decision-making process. That’s 26% more than general Millennials and 34% more than GenXers.
The affinity for social networks among Affluent Millennials will push financial service providers to deliver more through social media. In fact, one in five believe social networks will eventually become the hub of all their financial information.
Status Update: It’s Already Happening on LinkedIn
In addition to the data provided through the research, LinkedIn sees these social trends emerging on their social platform, which is very popular among Affluent Millennials. They have twice the connections, company follows, group activity and shares as the general population. But even more importantly for financial service providers, Affluent Millennials share financial content 13 times more than other LinkedIn users.
The research is exceptional. I highly recommend downloading the “Winning Affluent Millennials whitepaper and diving into it, yourself. Big changes are coming, folks. Financial firms that build relationships with this powerful persona now will benefit long into the future.