Letter From The President - Discussing Risk With Millennials


This week our country noted the somber anniversary of September 11th and it was noted that a child born on that date is now eligible to vote and to enter the military.  Millennials, who are slightly older than that child, ranged from ages 5 to 23 on that date.  Most have a memory of that date.  They also have a memory of the Great Recession when they were 7 years older…and both of those memories have an influence on the investment decisions they make today.

We recently completed research with High Income Millennials and we asked them if the Great Recession impacts their opinion of investing.  On a scale of 0 to 100 with 100 being “completely” and 0  being “not at all”, the High Income Millennials scored a 47.92.  It’s interesting to note, however, that younger Millennials, those under the age of 29 scored at 53.13.  Maybe they were younger and more emotionally impacted by stories they may have heard.  It’s important for advisors to remember that these young investors have actually experienced a market downturn.  For many Baby Boomer investors they had not actually experienced a bear market when the Great Recession occurred.

We also asked these wealthy young investors if they considered investing in the stock market to be risky.  Similarly they scored the risk at 57.38.  Younger investors scored a 64.93 and females scored a 61.24.  Despite the fact that the current market has primarily been a bull market, the ongoing volatility may be disturbing to these young investors.

Now, despite the fact that I am pointing out that Millennials are somewhat afraid of risk, their overall appetite for risk is actually very high.  Forty-two percent consider themselves to be Most Aggressive/Aggressive and 44% indicate they are Moderate.  Thus, consistent with their age, they are aggressive with their risk tolerance.


It’s important to discuss with Millennials their own recollection of the Great Recession and its impact on their investment decisions.  Being aware of their background will allow you to bring better counsel to them as they plan for their own futures.  Another important discussion is how they actually define “aggressive” investment behavior.  Sometimes the vernacular used by one generation doesn’t immediately transfer to another.

The Millennials will be influencing the investment industry for the remainder of most of our careers and lifetimes.  It’s important we develop an understanding of exactly how they define risk and its relationship to their lifestyle.