It’s a growing trend that the wealthy millennials like to manage their own money instead of hiring a financial advisor. Because why pay someone to manage your money when you can!
This is the case for many millennials, including the owner of the startup SwagUp Michael Martocci. He’s a wealthy 26-year-old based in Miami who takes care of all his money.
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SwagUp, Martocci’s company creates and distributes branded items such as tote bags, which make up the majority of its wealth. He invests 90% of his money in cryptocurrency while managing hundreds of thousands of dollars in investments.
It’s easy to manage $ 500,000 or $ 1 million on your own, Martocci told The Wallstreet Journal in a report on Monday. He also added that he spends less than an hour a week monitoring his investments.
According to research firm Aite-Novarica Group, which analyzed data from the Federal Reserve, about 70% of households with a net worth of $ 500,000 or more and headed by someone under the age of 45 had a style of highly or mainly self-managed investment. in 2019. This is an increase from 57% in 2010.
The 26-year-old is in charge of his wealth management like another majority of wealthy millennials. He is the perfect example to highlight a trend among wealthy millennials to manage their own money rather than relying on traditional financial advisers.
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He said he had no desire to play golf with an advisor from Goldman Sachs Group Inc. who wanted him as a client. He went on to explain in the interview how he dodged such golf encounters several times.
Where are the wealthy millennials investing these days?
Today’s wealthy millennials prefer risky investments that could potentially double or triple their money over those that offer market-like returns. Robinhood user Martocci is like many other young investors who believe low-cost, do-it-yourself digital platforms can provide investment advice.
Additionally, many people want to invest in riskier assets like cryptocurrencies and tech startups that aren’t offered by traditional financial advisers.
With the skyrocketing price of bitcoin, ether, and other digital assets, the cryptocurrency market has become increasingly attractive to investors. The market topped the $ 3 trillion valuation mark for the first time on Monday, as Aether hit new highs due to a higher rate of token consumption and new money pouring into the Marlet.
Meanwhile, Martocci said that if he receives a windfall from the sale of SwagUp, he will seek the advice of a financial advisor. But until then, he would like to manage his finances on his own.
Another example is Travis Chambers, a 33-year-old man who ended up getting $ 9 million in windfall selling part of his advertising agency. He thought about going for a financial advisor and interviewed four virtually for the job. But none of them could get his attention.
According to him, they all made no effort to show him how they stood out from the crowd and why he should hire them. So he decided to take care of his money on his own. He invested $ 1 million in a hedge fund managed by his business partner’s neighbor.
He invested an additional $ 1.5 million to secure Airbnb rentals in integrated low-income areas. In addition, he made an investment in Utah which involves building futuristic huts.
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Although he did mention how US Bancorp is trying to entice him by offering him an interest rate of 2.75%. As long as he invests $ 1 million in their brokerage account. Chambers is considering this offer. But, he said he would still take care of most of his money by investing himself in things that appealed to him like cryptocurrency and real estate.
What Are Financial Advisors Doing To Attract Millennials?
Financial advisors realize they need to find ways to attract the next generation. They say they do more than just put a client’s money in bonds or stocks. They help their clients plan and achieve their financial goals. They help them make irrational decisions that would affect their assets in the long run. In addition, they can also manage their clients’ taxes.
Some large wealth management companies rely on these millennials to age before they have them as clients.
Jed Finn, COO of Morgan Stanley Wealth Management and Head of Corporate and Institutional Solutions, said: “When you start to move from the wealth accumulation phase to the retirement phase, the world becomes a lot. more complicated. ”
According to him at that time, these Millennials will turn to financial advisers who will be ready to take care of things for them.
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In addition, companies are also testing the latest technology to attract young customers. According to Merrill, they have enabled people under the age of 45 to become customers and generate a total of 20% of new customers this year.
This has increased from the 10% younger new customers they got five years ago. All of this was achieved by improving technology and hiring a variety of financial advisors.
It seems that for now, the wealthy millennials want to figure things out for themselves. And there are plenty of new plans for wealth management companies to come up with to get them to trust them.
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