Poked, prodded, studied, analyzed—millennials are under the proverbial microscope. On track to become the richest generation to date by far (driven by a combination of the highest standard of living and largest wealth transfer in U.S. history) companies want what millennials got; their money.
RBC Wealth Management is the latest to take a hard look at the generation, and found that high-net worth-millennials in particular—defined as those under age 35—are more confident and prepared than previous generations when talking about and planning for wealth. That’s in part because of the support they receive from family.
Our neighbors to the north found the cohort is proactive and curious about financial matters, with the clear majority (80 percent) feeling responsible for understanding their own financial affairs, a contrast to the stereotype of millennials as disengaged and irresponsible.
Additionally, 69 percent reported they conduct their own research to improve their financial knowledge, a higher rate than older generations.
Millennials also have the benefit of a head start in preparing their finances. Survey respondents said the average age they started their formal education on financial issues was around 20, while Gen-Xers said they started learning around age 25, and baby boomers around age 32.
“Millennials are more educated than previous generations, with more attending college than their parents and grandparents,” Angie O’Leary, head of Wealth Planning at RBC Wealth Management-U.S, said in a statement. “They’re a more mindful generation with a global perspective, all of which has factored into their sense of responsibility about finances.”
When millennials inherit wealth, the survey results show they have an important advantage over prior generations: a support network of family that wants to help them succeed.
In fact, 51 percent of millennial survey respondents said they received guidance from other family members on wealth transfer, a significantly higher proportion than other age groups surveyed.
“In general, millennials and their parents have a different relationship than baby boomers and their parents,” O’Leary added. “Parents are much more involved now in their children’s lives through early adulthood, and that’s led to a more open dialogue between generations on the topic of wealth.”
But many millennials still have a way to go. Thirty-five percent of millennial respondents have only taken the initial step of drafting a will, and 36 percent have done nothing to prepare for wealth transfer.
“Regardless of their level of preparation, millennials are learning about finances earlier, and that’s a positive trend,” O’Leary concluded. “As long as they’re thinking about the basics of financial literacy, such as budgeting, investing and saving for retirement, they’ll be off to a great start.”
The research includes responses from high-net-worth individuals under 35 who have average investable assets of $5.7 million.
Other key findings from the report include:
- Some millennials are looking ahead to their future beneficiaries: 38 percent of millennial respondents said they already have a wealth transfer strategy in place, and 41 percent said they plan to pass on assets gradually over their lifetimes, rather than transferring all their assets upon death.
- Millennials that have already received an inheritance are thinking about what they can do to improve on the process. Fifty-three percent of millennial survey respondents said they intend to provide a greater level of support to beneficiaries than they received.