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UBS Investor Watch Report Reveals Millennials Are As Financially Conservative As Generation Born During Great Depression

New York | | Media Releases Americas | WM Americas News

Millennials shatter stereotypes, believe in hard work, worry about parents' financial health, and define success as a combination of money, healthy relationships, and enriching experiences

New York, NY - UBS Wealth Management Americas (WMA) today released its quarterly  UBS Investor Watch report (PDF, 1 MB), that shows Millennials (people ages 21-36) are the most fiscally conservative generation since the Great Depression. While Millennials describe their risk tolerance as either conservative or somewhat conservative (34%), their average asset allocation is extremely conservative, with the average portfolio dedicating 52% to cash, compared to 23% cash for other investors.

The majority of Millennials said saving was the best financial advice they had received, while other generations said investing was the best. This Depression Era mentality combined with advice they get from family is turning Millennials into a generation of savers who are skeptical about long-term investing and market chasing. Only 12% of Millennials said they would invest found money in the market, and only 28% see long-term investing as a pathway to success and are focused on meeting their goals instead of a specific market return.

UBS Investor Watch - Think you know the Next Gen Investor? Think again. - thumbnail

"Millennials seem to be permanently-scarred by the 2008 financial crisis," said Emily Pachuta, Head of Investor Insights, UBS Wealth Management Americas. "They have a Depression Era mindset largely because they experienced market volatility and job security issues very early in their careers, or watched their parents experience them, and it has had a significant impact on their attitudes and behaviors."

What is success

UBS Investor Watch research insights shatter other stereotypes about the Millennial generation. A large majority believe the road to success requires hard work (69%), saving and living frugally (45%), and a good education (37%). When it comes to defining success, Millennials and other generations have added emotional and relationship factors and life experiences to the traditional financial definition.

But money clearly matters to Millennials, who say financial freedom is the single most important factor of success (48%) and say that a household income of $220,000 defines success, and that increased funds would notably improve their happiness, specifically an additional $1 million. While all generations feel successful, only Millennials are decidedly more optimistic about their own – and their children’s – ability to be successful in the future.

Conventional wisdom has categorized Millennials as ‘entitled’ and ‘lazy’ because they have more than their parents and grandparents did. But this study counters that hypothesis,” says Pachuta. “Having witnessed both the technology boom and the collapse of global markets, it has made Millennials concerned, but resilient, and optimistic for the future. They’re conservative, similar to the WWII generation coming out of the Great Depression, not resting on their laurels, but rather working hard for their wealth and success, making sacrifices because they believe their goals are achievable.”

Millennials as worried about parents as parents are worried about them

As a result of seeing their parents' retirement and investing plans seriously disrupted by unprecedented market volatility, concerns about parents rank near the top of Millennials' personal financial concerns. Millennials are more concerned about their parents' financial situations (21%) when compared to Gen X (15%) and Boomers (4%).

Questions about financial stability and the ability of younger generations to succeed on their own exposed the most divergent perspectives on money and success. While the majority of both Millennials (57%) and Gen X (56%) investors believe that they already have achieved financial stability, or will in the future, only 18% of Baby Boomers and 21% of Swing/WWII investors predict that their children currently or will have more financial stability than they have.

The majority of older generations (59% of Baby Boomers and 54% of Swing/WWII-era investors) also feel that their adult children need more help to succeed than they did at their age. As a result, they often provide financial (32% of Swing/WWII; 39% of Baby Boomers) and emotional (63% Swing/WWII; 59% of Baby Boomers) support.

Millennial Investors at a glance

Ability to achieve financial goals

Extremely/very confident

Financial situation compared to last year

Significantly/somewhat better

Financial situation a year from now

Significantly/somewhat better

Top financial concerns

Retirement
Their and their parents' financial situation
Getting good financial advice

Risk tolerance

Conservative

Plans for cash holdings in next 12 months

Stay the same or increase

Current cash allocations

52%

Investment approach

Closely track market performance

Biggest investment risk

Losing portfolio value and
Missing out on market gains

Seek financial advice about

Real estate
Major purchase
Investments

Seek financial advice because

Large financial impact

Decision impacts others

My lack of knowledge

Seek financial advice from

Spouse/Partner

Parents

Reason to consult advisor

Trust

Their experience

How decision is made

Consult a source for advice

About UBS Investor Watch

UBS Investor Watch is a quarterly publication analyzing the latest in investor sentiment and behavior. Dedicated to generating insights that help UBS Financial Advisors deliver exceptionally for their clients, UBS Investor Watch is the industry’s definitive guide to what’s on investors’ minds right now.

We invite you read the here: www.ubs.com/investorwatch

Methodology

The survey was fielded from December 31, 2013 – January 7, 2014. It was an online, blind survey conducted of investors and clients using an external vendor (Research Now). Respondents must be at least equally involved in household financial decisions. 4,165 U.S. investors responded to our survey. The core sample of 2,532 investors has at least $250,000 in investable assets; 1,130 have at least $1 million in investable assets. This UBS Investor Watch included two oversamples:

  1. 1,169 Millennials: respondents ages 21-29 have at least $75,000 in household income or $50,000 in investable assets; respondents ages 30-36 have at least $100,000 in household income or $100,000 in investable assets.
  2. 564 investors who did not use a financial advisor: all have at least $250,000 in investable assets and 276 of these investors have at least $1 million in investable assets.

Media Inquiries

New York Gregg Rosenberg 212-713-8842
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Notes to Editors

About UBS Wealth Management Americas

UBS Wealth Management Americas provides advice-based relationships through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs of ultra-high net worth, high net worth and core affluent individuals and families. It includes the Wealth Management U.S. business, the domestic Canadian business and the international business booked in the United States.

About UBS

UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. Its business strategy is centered on its pre-eminent global wealth management businesses and its universal bank in Switzerland. Together with a client-focused Investment Bank and a strong, well-diversified Global Asset Management business, UBS will drive further growth and expand its premier wealth management franchise.

UBS is present in all major financial centers worldwide. It has offices in 57 countries, with about 35% of its employees working in the Americas, 36% in Switzerland, 17% in the rest of Europe, the Middle East and Africa and 12% in Asia Pacific. UBS employs about 65,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).