The wealth of millennials and Generation Z grew 25% in 2021, according to a new study. Last year, combined total assets of these two age groups grew to $3.6 trillion from $2.9 trillion in 2020. The study also found that 59% of millennials said they wanted more financial advice than they currently receive. According to the Brookings Institution, more than half of Americans are millennials or younger.
Category: Advisor news
Demand for ESG investments projected to soar
Assets in ESG (environmental, social, and governance) focused investments are expected to grow at a much faster pace than the asset and wealth management market as a whole, according to a new report. ESG assets in the United States are expected to more than double from $4.5 trillion in 2021 to $10.5 trillion in 2026, while ESG assets in Europe would increase 53% to $19.6 trillion. ESG assets are on pace to account for about 21.5% of total global investment assets under management in less than five years, the report noted.
Social Security announces 2023 COLA
The Social Security Administration announced the 2023 COLA (cost of living adjustment) for benefits will be 8.7%. The increase marks the largest COLA since 1981. The annual inflation adjustment is made to help retirees keep up with higher costs. Beginning in January, the COLA will result in a benefit increase of more than $140 per month, the report noted. Some 66 million people receive Social Security benefits.
ESG rule under review
The Department of Labor’s final rule focused on ESG (environmental, social, and governance) factors and retirement accounts was submitted to the Office of Management and Budget for review, according to a recent article. The rule would allow retirement plan fiduciaries to consider ESG factors when selecting investment choices or offer ESG-related investments in qualified retirement plans. A final rule could be released by year-end, the report noted.
Market optimism falls among investors
Market optimism among investors and advisors fell to half of what it was in 2021, according to a recent survey. Investor optimism about their investments fell to 31% this year from 67% in 2021. The number of investors citing a pessimistic view jumped to 36% from 7% last year. Market confidence fell among advisors, dropping to 34% this year from 78% last year. More advisors also reported a pessimistic investment outlook, with the total rising to 25% from 3% a year ago.
Why investors consider robo advice
Two thirds of adults in a recent survey said they would consider using a robo advisor. The poll found 41% of respondents currently work with a human financial advisor and only 1% use a robo advisor. Three quarters of millennials said they would consider a robo advisor compared with 43% of boomers. The majority (80%) of those polled said they would consider a robo advisor if they knew it was less costly. Most respondents (65%) cited help managing money and savings as the most common reason for having an advisor.
Donors consider a variety of assets for charity
Many adults donating to charity this year do not plan to consult a financial advisor, according to a recent survey. Just 23% of respondents said they plan to seek advice. Among those working with an advisor, 70% are more likely to donate different types of assets other than cash including stock, real estate, and other business assets. In addition, 35% of those with an advisor said they felt more successful meeting their goals compared with 17% of those without an advisor
Investors seek advice to deal with volatility
Professional advice can help investors manage market volatility, a recent poll found. Most respondents said two factors help them manage their emotions during market volatility: guidance from a financial advisor and investment transparency. The report also found a growing interest in knowing more about the managers behind the funds. The number of respondents citing a “high interest” in the managers rose to 36% in 2021 from 29% in 2020. Consumer interest in the investment companies managing mutual funds jumped to 44% in 2021 from 31% in 2020 among younger investors (ages 35–44).