The Advisor Advantage in the Rise of the Millennial Investor

Published on

March 4, 2021

How to prepare your business for a millennial client shift and an increasing interest in sustainable investing.

Millennial investors — born between 1981 and 1996 — are changing the way we invest. They prefer their investments at their fingertips, they get investment and financial advice from TikTok, they disrupt markets by revolting against big Wall Street hedge funds, and they believe that their investment decisions can and should make a societal impact.


The largest intergenerational wealth transfer in history will pass down over $30 trillion in inheritance from baby boomers to millennials and Generation X across the next few decades. This is expected to increase millennial’s earning power by almost 75% across the next few years. As an advisor, the time to prepare for the investment interests of your future and current clients is now.

We’ve outlined the biggest trends in millennial investing and what you as an advisor can do to get ahead of the curve. As an advisor, this is an opportunity to offer the necessary value to retain, engage, and attract your current and future millennial clients.

Rising interest in sustainable investing

In 2019, 95% of millennials reported interest in sustainable investing. Heavily influenced by their interests and values, 84% of millennials indicated an interest in products that would allow them to invest with those values in mind.


According to Morningstar, $20.6 billion of investor dollars focused on ESG themes in 2019, four times higher than the previous year. While millennials clearly are interested in ESG investing and are often credited with it’s popularity, they are actually not the real reason for this rising ESG investment.


Investment action around ESG is driven by baby boomers and Gen X, with Gen X leading the charge. Only 67% of millennials in 2019 took part in at least one sustainable investing activity.


Source: Morgan Stanley Institute for Sustainable Investing


The hold-up with this generation is that, for many, the myth still stands that investing according to your values requires financial setback. Our blog post on “What COVID-19 Teaches Us About ESG Investing” shows that this is hardly the case. Although millennials are interested in sustainable investing, we’ve seen a rise from 54% in 2015 to 77% in 2017 of millennials who still believe that “investors must choose between financial gains and sustainability”.

This perceived risk of sustainable investing is harder for millennials to overcome than other generations. Millennials, who felt the greatest impact from the 2008 global financial crisis, are a very risk-averse generation. In the Global Investment Survey, they found that 85% of millennials consider themselves “conservative” when it comes to their risk tolerance. Another survey of this generation shows that four in five still feel the impact of the financial crisis when making investment decisions.

Additionally, many millennial investors are using investing services or products that make this level of values-based portfolio customization next to impossible. 65% of people cite lack of available financial products as one of the biggest barriers to sustainable investing. What’s more is that many millennials are feeling disenfranchised with millennial-targeted DIY investing services such as Robinhood, which has recently faced backlash in the wake of the GameStop saga.

Yet taking it upon themselves to “figure out” sustainable investing is not an appealing option either. 74% of millennials cite the time and effort it takes to understand sustainable investing as too big of a barrier to adoption. After all, most retail investors, millennials included, aren’t interested in spending hours on their investment strategies and prefer a more automated or hands-off approach.

So what we have is a gap between interest and action that is primarily a result of a lack of information and technology. As an advisor, you are well-positioned to fill the gaps of both. Here is an eager group of investors who have a demonstrated interest in a service — 84% want social and environmental impact reporting and 90% are seeking the opportunity to tailor their impact — but don’t currently have access to this level of value that they desire.

As an advisor, you can step in and offer personalized customization of their portfolio that allows them to see the tangible impacts of their investment. You can also point this generation to the facts of sustainable investing, and help them overcome the myths that are holding them back.

85% of millennials believe that their investment decisions can influence climate change.

Doing this will not only fill a necessary gap for these young investors but would drive your business forward with increased client satisfaction and retention. Additionally, as this generation is poised to inherit over $30 trillion as part of The Great Wealth Transfer, this opens up the possibility of those dollars going into the market — and into your business — as opposed to hoarded as cash due to risk aversion. With this level of customization and information, you position yourself as a service provider and not just a salesperson for another investment product.

Millennials believe their investments can make an impact

Although millennials have their doubts about the trade-off of financial impact for non-financial gains, this hasn’t swayed their belief that sustainable investing has long-term benefits. For example, 85% of millennials believe that their investment decisions can influence climate change and 89% believe it can help lift people out of poverty.



Source: Morgan Stanley Institute for Sustainable Investing

Societal crises like the COVID-19 pandemic, increasing natural disasters, and unrest due to racial and gender inequality have heightened the urgency to address some of the world’s biggest challenges. Yet the population, younger generations especially, have lost a good amount of trust in the capability of government, NGOs, and media to drive change. Additionally, most people feel powerless as individuals to make changes that can address these complex societal issues.

Business is the only institution of the group that still manages to be seen as both competent and ethical, with a 61% trust level globally. This is why people look to businesses, that they still trust, to make progress and commitments towards addressing these causes. However, a business' bottom line doesn’t always lend itself to moral decision-making. With the move towards values-based investing, millennials believe they can exert more individual influence and hold businesses accountable to this necessary forward progress as a society.



Source: Edelman 2021 Trust Barometer

This distrust paired with the belief that their individual investment decisions can bring about societal change makes this generation more motivated than generations before them to take the reins and drive the change they want to see in the world. Although the pandemic hit millennials hard, with one in five having lost their job, they are viewing this moment in history as an opportunity to hit reset and work towards a better future.

This opens the doors for values-based investing, offering millennials a tangible solution to complex societal problems. With sustainable investing, you can offer millennials the chance to make decisions centered around the changes they hope to see in the world. They read about the threat of climate change, and now they can divest from fossil fuels through their investment portfolio. They are frustrated by the lack of justice for black and brown bodies, and now they can take action against systematic inequality by investing in racial justice.

Don’t forget about Gen Z

We like to talk a lot about millennials, but what we can’t afford to forget is the generation that falls immediately behind them: Gen Z. Born between 1997 and 2012, this generation is still young but entering their early to mid-20s with increasing exhaustion over a lack of progress towards our biggest societal challenges.

94% of Gen Z — compared to 87% of millennials and 86% of the general population — believe companies must take action to support social and environmental issues, and 75% will research to check in on that progress. If we think millennials have a sense of individual responsibility to push companies along, that is nothing compared to Gen Z.

This generation was born with technology at their disposal, and they will wield it to make their impact. For example, 81% of Gen Z believe that they can have an impact on social or environmental issues through social media.

While this generation is not yet your clients, they will be in a shorter amount of time than you might think. As a result, the need for greater customization, values-based investing, and advanced technology will only increase as they follow millennial footsteps and take their place in the financial landscape.

The values-based investing advisor advantage

We’ve demonstrated the high interest that millennials and their succeeding generation have in sustainable investing, and the major barriers to adoption. What remains is an opportunity as an advisor to attract and retain these passionate generations of investors who are incredibly committed to individual action. The investing industry as it stands today is not meeting this demand, making it a highly sought-after service.

Seven out of ten asset managers have indicated concerns over a lack of non-financial performance tracking and a general inability to quantify portfolio impact for their clients. With OpenInvest, you can build stronger relationships with your clients by delivering positive financial performance alongside personalized impact reporting.

As values-based investing moves more and more into the mainstream with the rise of millennial— and Gen Z — investors and we start to see the beginnings of the Great Wealth Transfer, it is advisors who will lead the charge to improve accessibility to this sought-after service and guide the future of sustainable investing.



Investment in securities involves the risk of loss. Past performance is no guarantee of future returns. One cannot invest directly in an Index. Any opinions, estimates and forecasts offered in this document constitute judgment as of the date of the materials and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information contained in this document to be reliable but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only and it is not intended to provide and should not be relied on for investment, accounting, legal or tax advice. OpenInvest may not have verified (and disclaims any obligation to verify) the accuracy or completeness of any information herein that has been provided or obtained by third parties.

Want articles and insights straight to your inbox?
Sign up for our newsletter below.