Personal Investor: Why millennials are more trusting of the investment industry than boomers
It should be no surprise that trust in the investment industry plummeted in the wake of the 2008 global financial meltdown. Millions of investors trusted their life savings with advisors they thought were protecting their retirement nest-eggs.
Ten years on, a new survey from Greenwich Associates for the Chartered Financial Analyst (CFA) Institute finds a new generation is willing to forgive and forget – well, most of them. While trust rates for baby boomers (55 years and older) languishes at 40 per cent, 55 per cent of millennials (25 to 34) say they are more trusting of the individuals and institutions that manage their money.
Oddly enough, the survey finds investors from generation X are wildly split on the issue of trust. Forty-nine per cent of those aged 35 to 44 say they trust the investment industry, while only 35 per cent of gen-Xers aged 45 to 54 share the same sentiment.
But the newfound trust from millennials is part of a broader trend – a trust in new technology. Another survey question asked investors if they find human advisors are more important and reliable than the latest technology for executing investment strategy. In other words, do they trust a recommendation from human advisors more than robo-advisors?
Only 33 per cent of millennials aged 25 to 33 said yes. According to the survey, trust in humans over robots increases with age to the point where 64 per cent of investors aged 55 to 64, and 70 per cent over the age of 65, prefer humans.