Stung by the stock market, Gen Z and millennials still shun advisors

Trader Talk

Priyanka Godbole, a 24-year-old public relations professional in New York, had the first market panic of her life in mid-March, when the S&P 500 index plunged deeper into correction territory. In a frantic group chat with friends, she typed, “Have you seen what happened today?” 

That March 14, Wall Street’s gauge of leading U.S. companies had slipped again on a spate of bad news, including a resurgent pandemic in China that could crimp exports to American companies and a hit to war-ravaged Ukraine’s commodities exports. The S&P was down nearly 13% from its all-time peak in January. Godbole’s portfolio had fallen to around $40,000, roughly 25% below its peak of $53,000.

“I’m not looking” at my online brokerage statement, one see-no-evil friend messaged back. Another wrote stoically that she was “not touching things.” 

“We totally had a freak-out moment,” Godbole said. “I was doing research on exactly what a bear market means, and it’s kind of terrifying.”

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Her fact-finding didn’t come from a financial advisor, because she doesn’t use one. Instead, Godbole said she gets her market news and advice from an app from TD Ameritrade, where she has a brokerage account, along with The Motley Fool, The New York Times and Bloomberg. It’s all part of her DIY route to wealth building, in which she’s put half of her money into individual stocks including Tesla, Microsoft, Costco and Netflix, and the other half into two exchange-traded funds, Vanguard Total Stock Market Index Fund and Vanguard S&P 500 Index Fund. 

“I think it’s more personally satisfying to invest your own money and learn a thing or two about doing it solo, as it forces you to keep up with current events,” Godbole said. “I have not considered using a financial advisor, ever.”

Time is on their side
From Gen Z members like Godbole, who started investing in 2019, to slightly older millennials, younger investors appear to prefer to handle their long-term savings plans on their own — even as some experience their first down market. The self-sufficiency method, fueled by robo advisors and a flood of free investing news and data, is a big challenge for the wealth management industry, which sees the earnings potential of the well-educated, socially conscious cohorts as a big opportunity. While generational definitions vary — Goldman Sachs has its own — Pew Research considers anyone born after 1996 to be Gen Z (the oldest are now 25), and those born between 1981 and 1996 (now aged 26 to 41) to be millennials.

Just over half, or 56%, of Gen Z and 65% of millennials use financial planners, according to a 2021 survey by the National Association of Personal Financial Advisors. But are they even listening? Only 21% of millennials get most of their financial advice from an advisor; for Gen Z, it’s 17%, the trade group found. Other data suggests that even fewer younger investors use professionals. Natixis says only four in 10 millennials use advisors. 

A handful may be coming around, thanks to stocks skirting close to a bear market (a 20% tumble from a recent high). Derek Delaney, the founder and president of PharmD Financial Planning in Owatonna, Minnesota, said nine millennials had reached out to him during the last two months. 

“They pick up the phone and say, ‘I like the SPDR ETF’” that tracks the S&P 500. “I go, ‘well, what are you investing in with the S&P 500?’ They don’t understand that the 10 biggest stocks are 80% of the index and that their diversification is not as great as they think.” Four of the callers became clients.

The end of the three-year bull market notwithstanding, many younger investors have their own money — and will soon possess even more.

Nearly one in four millennials aged 24 to 41 had savings of at least $100,000 in winter 2020, according to Bank of America. Millennial households will inherit more than $27 trillion by 2045, a big chunk of the “Great Wealth Transfer” that will shift $84 trillion in assets from older generations to younger ones by that year, according to Cerulli Associates. 

Advisors with young clients say those who avoid financial planners aren’t avocado-toast eating slacktivists, a meme that emerged in 2017 when an Australian property mogul told “60 Minutes,” “when I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each.” 

Younger investors get bashed for their fancy food preferences, but many have accumulated sizable savings.

Younger investors get bashed for their fancy food preferences, but many have accumulated sizable savings.


Richard Cooke, the principal owner of 2Point0 Financial in Fishers, Indiana, said his younger clients see investing as a long-term game with short-term fluctuations. 

“Most witnessed the Great Financial Crisis from the sidelines, and although we saw how scary that was, we saw the market recover from it,” he said, referring to the global financial crisis of 2007-09.

If the current market downturn doesn’t do the trick, advisors hope the coming flood of money, combined with the financial complexity that being older brings — paying for college, buying or selling a home, rolling over 401(k) retirement plans, helping older parents downsize, gaming out what to do when no longer working — will spur DIYers to turn to planners. 

Possibly, said Godbole, a graduate of Northwestern University: “Hm, I haven’t really thought about it, but maybe. Depends on if I decide to combine finances with a spouse etc.”

The Trojan horse
For its part, Wall Street thinks the Trojan horse way into high-achieving younger investors’ wallets might be their parents. What Morgan Stanley Wealth Management Senior Vice President Lori Sackler called “the two M words: millennials and money” came in a 2020 post aimed at older, well-heeled clients — a mainstay of Wall Street brokerages — with millennial children. 

“Many people who have been successful in their own profession or career believe that their intelligence and expertise in one field gives them the knowledge and wisdom they need to do their own financial planning,” she wrote, adding that’s a mistake.

Godbole, who said she first learned about investing from her father, is a counterpoint to popular narratives that associate Gen Z investors with hype on the Reddit forum r/WallStreetBets, day trading on Robinhood and meme stocks. She said she’s avoiding the mistake her father made  and now regrets: day trading in the 2000s. 

“This is not money that I plan on touching for the next decade, at least,” she said.

But James Crider, the CEO of IntentionalLivingFP in New Braunfels, Texas, cautioned that many millennials have a “false sense of market elasticity” that markets will quickly rebound. “Their experience of what it looks like to ‘buy the dip’ has been a market tumble followed by a relatively quick rebound,” he said, “reinforcing the notion that the market only goes up, even in the short term.”

Experience counts
Older millennials are aged enough to recall the bursting of the dot-com bubble in 2000 or the trauma of job hunting during the Great Recession, said Ryan Graces, the president of Bemiston Asset Management in Webster Groves, Missouri. 

“They witnessed a lot of market volatility before their prime asset accumulation years, which shaped their market expectations,” he said.

James Marquez, 29, a wealth advisor at Capstone Wealth Advisors in Downers Grove, Illinois, said many younger clients had called in recent weeks to ask what they should do. Marquez said he showed them data on what happens after market pullbacks and “coached them through the mindset” that they have to be ready for the potential of losses at any given time. “You may not have experienced volatility in your life, but this is a thing.”

Godbole said that she and her friends “have just been playing the long game and holding everything and buying the dip, knowing that in time the market will even itself out.”

But the lessons each generation learns don’t automatically transfer to the next, said Neel Ganu, a co-founder of Finch, a credit card and savings app geared to millennials and Gen Z. “Whether 25, 45 or 65,” he said, “each age realizes things they wish they’d known earlier.”

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