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Financial and investment self-management important to millennials

Date posted:  1/4/16 06:15:00 AM Millennials are confident in their ability to self-manage their wealth.

The total number of millennials in the U.S. is roughly 100 million, and this diverse demographic is coming of age and taking a cautious and controlled approach to money management. The White House Council on Economic Advisors noted millennials represent more than one-third of the total population. Highlighting the importance and financial power of this group, Hanson Dodge, an advertising agency, stated millennials will possess more spending power than any other demographic by 2017.

With millennials gaining ground in both spending and population, it's important to take note of this generation's stance on money management.

Millennials seek personalized investment strategies
Coming of age during an economic downturn has shaped the viewpoints of millennials considerably, and more than previous generations, millennials are hesitant to let an advisor handle their investments. In total, millennials are generally more cautious of the stock market and prefer straight-forward investment strategies.

"Millennials want more direct control over their financial futures."

Consulting firm Deloitte pointed out that even though 72 percent of millennials describe themselves as self-directing their personal wealth, 84 percent of this generation still seeks financial advice. And because millennials have less experience managing wealth and the intricate nature of finances, less than 30 percent of millennial wealth is invested in stocks. Rather, the group prefers cash, physical assets and other simple investment products.

Due to these factors, millennials tend to steer away from risky investment strategies offered by advisors and instead search for financial advice tailored to their needs. Millennials want more direct control over their financial futures, which means advisors must customize their strategies accordingly.

Millennials want real-time access 
Millennials are inherently more tech-friendly and want digital platforms where they can access and evaluate their assets in real time. Conventional face-to-face meetings and phone calls no longer placate this growing cohort of investors. They want to be able to self-educate and locate information on their own terms, according to independent financial news site Financial Planning.

Common interactive features growing in popularity are online investment forums, financial management portals and robo advisors, which provide information and advice in real time. Likewise, data from Phoenix Marketing International as reported by Financial Planning indicated 70 percent of millennials pick and choose which advice to follow rather than simply agreeing with information they receive.

Millennials are active, yet cautious when it comes to planning their wealth management strategies.Millennials are active, yet cautious when it comes to planning their wealth management strategies.

Because millennials are more selective with their wealth and prefer to check the performance of their assets online, convenient digital tools that deliver up-to-date information are highly sought after. Whether it's portfolio trackers, data aggregators or one-click investment options, millennials are trending toward enhanced online interactivity.

Millennials saving sooner
While much has been made about millennials and their financial habits, a report from PricewaterhouseCoopers (PWC) stated those aged 24-35 save 18 percent of their earnings, whereas those between 45 and 54 only save 12 percent. These findings show that younger workers are putting money away sooner than previous generations, and doing so at a higher rate than expected.

In addition, millennials are set to collectively inherit $36 trillion dollars by 2061, according to the Boston College Center on Wealth and Philanthropy. This new-found wealth will serve as the backbone of an entire generation's investment power, of which social causes will play an ever-increasing role. The PWC report noted 84 percent of millennials believe social responsibility is more important than recognition for their professional achievements. This means millennials are looking to invest in companies that have a positive impact on the general well-being of others around the world. Known as socially responsible investing (SRI), this strategy hinges on the personal considerations of investors as opposed to solely relying on potential yields.

As millennials continue to redefine the private wealth management landscape, the proliferation of unique, forward-thinking online investment options is likely. And to cater to these demands, new planning tools and investor-centric advice will be a crucial factor in determining how confident and secure millennials are in managing their own wealth.

While many may view millennials as being more particular with their money management strategies, the truth is that they simply want to make smarter, risk-averse investments they can believe in.