Can Your Retirement Woes Be Solved Online?
NEW YORK ( MainStreet) Millennials are more likely to use Websites and social media in guiding them as they make financial and retirement decisions compared to Generation X.
Millennials (or Gen Y-ers) are more likely to use websites (58%) than Gen X (48%), according to a recent Nationwide Financial survey. Gen Y-ers (born 1978 to 1988) respondents are almost twice as likely to use social media at 25% compared to Gen X (born 1965 to 1977) at 13% as resources for financial planning.
Millennials are almost three times as likely to use books as a planning resource than Gen X (27% vs. 10%).
The survey was conducted to understand the current sentiment among consumers about financial planning, said Michael Spangler, president of Nationwide Funds Group. Many investors are getting their financial advice from books, friends, family, the Web, social media and TV instead of using a financial advisor.
Millennials seem to have "an inherent distrust of market investments, perhaps rightfully so given the recession of 2008," he said.
"In fact, the survey found that Generation Y was more afraid of investing in the market (74%) than they were of dying (71%)," Spangler added. "This means they are more likely to rely on their own sources for developing any sort of financial plan."
Millennials turn to Websites (58%) more than they do financial advisors (51%) for their financial planning needs.
"While research and ownership of your financial plan is good, those who want to go-it-alone could be overlooking some very important considerations like volatility, diversity and risk tolerance," he said.
Relying on social media sources is a double-edged sword, Spangler said.
"On the one hand, it is encouraging that younger investors are using online tools to become more educated investors," he said. "On the other hand, you can't write your financial plan based on information shared in 140 characters or sound bites. No online tool can replace the knowledge, experience and personal touch you get from a financial advisor."
While it is prudent for consumers to remain cautious as they make their financial decisions, timing the market is difficult, Spangler said.
"While they can't prevent downturns in the market, they can take steps to lessen the financial impact of those events and a financial advisor can help them do so," he said.
Financial advisors should work with Millennials online to help them reach their objectives.
"In order for advisors to reach Millennials, they need to go where they are and embrace social media and online communication, then personalize their efforts to address the concerns of this generation," Spangler said.
Millennials are comfortable turning to social media and Websites as financial resources, said Erin Lowry, founder of the blog Broke Millennial.
"We were raised in an era of just 'Googling it' whenever we had a question," she said. "Instead of just turning on CNBC when we get home from work, we can get timely updates on Twitter."