European millennials’ appetite for riskier investments in the current volatile market ranks higher than older age groups
The appetite of European ‘millennial’ investors (those born between 1981 and 1996) to make riskier investments amid market volatility is higher than the generations above them, according to the EY Global Wealth Research Report 2023, as younger investors more actively respond to and are influenced by external market events.
The report, which surveyed over 2,600 wealth management clients globally, including 600 across Europe, found that over a third of European millennials (38%) are allocating to riskier investments, compared to just a quarter (24%) of ‘baby boomers’ (born between 1946 and 1964).
This is despite over half (57%) of the millennials surveyed saying their investing needs have become more complex (compared to 35% of baby boomers) and 35% acknowledging they do not meet with their wealth advisor to review their goals frequently enough, which makes them less prepared (a figure that falls to 20% among baby boomers).
Peter Latos, Partner, Consulting, Strategy and Transactions leader, EY Romania: “Although European millennial investors have a higher risk appetite than baby boomers, they less frequently seek advice from their wealth advisor despite their investment needs having become more complex in recent years.
Time will tell what impact such behaviours have on the long-term wealth creation of millennial investors. The report also highlights the challenge for wealth management advisors to retain European millennial investors who are twice as likely to switch providers or move money than baby boomers.”
Appetite for advice grows
Amid prolonged economic uncertainty, demand for professional advice to interpret economic, market and political shocks is currently heightened for many investors.
However, European demand lags the global average. The survey found that 38% of European millennials and 34% of boomers are actively seeking advice from their financial advisor in response to political instability or uncertainty, compared to 42% and 33% respectively at a global level.
The survey also found that more than half (51%) of European millennials regularly seek additional independent financial advice in response to portfolio volatility, compared to 58% within this age group globally.
In terms of the preferred channels to receive advice, 47% of all European investors look to speak to advisors virtually, 30% opt for face-to-face interaction, and 23% look to the internet or apps.
This has changed since the previous EY Global Wealth Research Report in 2021, which found that 14% of European private wealth clients preferred virtual advice, 33% preferred face-to-face interaction, and 18% looked to the internet or apps.
Millennial investors are making the switch
The report also found that the appetite to switch or move money from one provider to another is highest within the younger investor age brackets.
Millennials in European markets were found to be more than twice as likely to switch, add a new provider, or move money (71%) than baby boomers (32%).
This is similar globally, where 73% of millennial investors plan to switch, add a new provider, or move money from their current wealth management provider over the next three years, compared to 29% of baby boomers.
Investment in newer asset classes – such as FinTech, digital and crypto – is on the rise, and European private wealth clients are looking to the FinTech and alternatives market.
The demand for professional advice for these asset classes is also higher than in traditional areas, and investor engagement with FinTechs is expected to rise 12% in the next three years.