Practical analysis for investment professionals
18 May 2015

Serving Millennials: Are Traditional Advisers Doomed?

As a category of investors, are millennials a unique breed? Must advisers adopt special techniques to serve them? And do millennial preferences and investing habits, combined with the technological platforms changing the advisory profession, mean that human financial advisers could become irrelevant in the future?

CFA Institute addressed these questions in a broadcast presentation organized as part of Putting Investors First Month 2015. Moderator Beth Hamilton-Keen, CFA, vice chair of the CFA Institute Board of Governors, led a discussion with Patrick O’Shaughnessy, CFA, portfolio manager and author of Millennial Money, and Jason Zweig, Wall Street Journal columnist and editor of the revised edition of Benjamin Graham’s The Intelligent Investor.

O’Shaughnessy began by defining millennials as individuals who are 18–35 years old. It is currently the largest generation in the United States. The millennial demographic has recently taken on special importance as the largest generation represented in the US workforce.

But the financial habits of millennial investors are troubling; O’Shaughnessy cited their low savings rate as an example of the “very paranoid, risk sensitive behavior” that they have developed in response to the catastrophic market meltdowns experienced in their lifetimes. Together, Hamilton-Keen, O’Shaughnessy, and Zweig discussed ways that advisers can approach their work differently to overcome this aversion by appealing to millennial values and desires — without compromising their fiduciary obligations and the principles of sound investing. You can watch the video below:

For Blogs and the Enterprise site

Recent developments such as robo-advisers and automated tools for selecting funds and constructing portfolios do not necessarily threaten human professionals. Instead, it’s an opportunity for advisers to focus on their unique competitive advantage. “Let the machines do what they’re good at,” Zweig urged, “so that people can do what they’re better at.” People are good at forging connections with other people, and advisers making use of today’s powerful asset allocation tools will have more time to build relationships so that they can understand each client’s unique financial needs.

O’Shaughnessy feels that when it comes to long-term investing success, “a lot more education is required” for millennials. Financial advisers have an opportunity to demonstrate their value by providing that education. O’Shaughnessy noted that millennials have difficulty making the distinction between a great company and a great investment. Millennial clients will eagerly research investment possibilities and make use of the endless supply of financial information available today, but there is still a need for financial advisers who can help put that information into context and maintain a long-term perspective.

Millennials, according to O’Shaughnessy, prefer transparent, rules-based or systematic strategies. Advisers can serve millennial clients by identifying which strategies are appropriate for their client’s needs, and by explaining how their performance will be affected by changing market conditions.

Zweig noted that CFA charterholders, in particular, are in a position “to separate the investment ideas that are likely to be liquid and stay liquid from those that have been mispackaged and mis-promoted.” On the other hand, advisers should be ready to admit when they’re in uncharted territory. “Three most powerful,” said Zweig “and rarest, words that advisers say is ‘I don’t know.’”

“We know the people we work with and manage our money much more intimately than we used to,” O’Shaughnessy said, and while that intimacy can be dangerous in an age where mishaps like inappropriate social media outbursts can be distributed farther and faster than ever before, it also offers the ability to build trust with clients. Advisers can attract millennial clients by demonstrating their honesty and integrity, or, as O’Shaughnessy put it, by “being true to the services that you’re offering.”

You can watch the full video to hear more from Zweig and O’Shaughnessy about crowdsourced investment advice, unused advantages of behavioral finance, and the pockets of danger that Benjamin Graham would find in today’s financial markets.

Afterwards, you can join the movement to advance the investment management profession by endorsing the Statement of Investor Rights online.

If you liked this post, don’t forget to subscribe to the Enterprising Investor.

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Photo credit: ©

About the Author(s)
Peter M.J. Gross

Peter M.J. Gross was an online content specialist for CFA Institute, where he managed blogs for the CFA Institute Annual Conference, European Investment Conference, and Middle East Investment Conference. Previously, he worked at Hampton Roads Publishing Company and at MFS Investment Management. Mr. Gross' articles have been published by Enterprising Investor, City A.M., Seeking Alpha, and The Hook, and his work has been highlighted by Real Clear Markets. He holds a BA degree from Connecticut College.

1 thought on “Serving Millennials: Are Traditional Advisers Doomed?”

  1. Joseph Jay says:

    Millennials want personalized help just like any other generation. Our Beginning Investor Program has been a huge success. Let me know your thoughts.

Leave a Reply

Your email address will not be published. Required fields are marked *

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.