Millennials, those aged 18-34, could learn a lesson from older generations on how to manage their finances, a US study says.

Ultra-high net worth Americans have clear-cut generational approaches to financial management, with baby boomers setting the standard for the millennial generation, according to a report from SEI Private Wealth Management.

The data showed wealthy Millennials must learn from their predecessors when it comes to judging investments and prioritizing, as well as the way in which they measure investment performance.

The report, which is based on a survey of 282 US-based UHNW individuals with an average $27.7 million of investible assets, showed that between approximately one-fifth and one-quarter of all respondents feel most confident with a “do-it-yourself” approach - aka making their own financial decisions - while two-thirds rely on input from either their families or a wealth advisor.

However, the statistics suggest older generations tend to favor wealth advisors; 57 per cent of wealthy millennial respondents feel most comfortable receiving advice from family, compared to 6 per cent of Baby Boomers, or those born between 1946 and 1964.

Meanwhile, 58 per cent of baby boomer respondents feel most confident getting advice from a wealth advisor, compared to just 8 per cent of Millennials.

“It’s not surprising that millennials rely primarily on trusted family members after experience the post-2007 economy in their early years of financial independence,” said Michael Farrell, managing director of SEI Private Wealth Management.

“Millennials need to learn to trust and verify professional advice and therefore, understand the difference between biased and unbiased advice in order to successfully navigate complex financial decisions.”

The report is a further illustration of how the wealth management sector is trying to calibrate its offerings to suit the perceived demands of different population cohorts. A study reported on here, for example, showed that the future success of the wealth management industry is reliant on how advisors fulfill the needs of specific generations of investors, with a focus on Generation X in their prime earning years and Millennials as they launch their careers, a study says.   

Measuring investment performance

Despite millennials having the longest investment horizon, the survey suggests they are least likely to focus on long-term financial goals. 

Only 28 per cent of Millennial respondents claimed they are committed to long-term goals, while nearly 38 per cent said they are concerned about short-term performance.

Baby boomers, on the other hand, are at the other end of the spectrum, with 52 per cent of respondents saying they prioritize long-term goals over short-term.

“There is a level of instant gratification and a false sense of control when you focus on short-term goals, and we see that manifest itself in the approach wealthy millennials take to investment management and measuring performance,” said Jeff Ladouceur, director of SEI Private Wealth Management. 

He added: “The reality: Focusing on the short-term is not the strategic way to manage your wealth for a number of reasons, and these survey results point to the complexity of financial decisions for both millennials and baby boomers.”

Priorities, Confidence and Goals

When it comes to defining goals and priorities, there appears to be a distinct difference between generations.

Some 71 per cent of Baby Boomers ranked a comfortable retirement as one of their top three priorities when it comes to setting investment goals.

In contrast, 49 per cent of wealthy Millennial respondents cited having a better lifestyle for themselves and their families as a top-three priority.

When questioned on what factors hold them back from reaching their financial goals, both generations blamed a lack of confidence in their investment skills as the top reason.

“Wealthy Baby Boomers understand their personal wealth management limitations and the value of trusted advice – particularly given the influx of new financial technology and solutions,” said Farrell.

“Meanwhile, wealthy Millennials lack experience and, often, the guidance of an advisor. It is important for individuals, regardless of their generation, to find a trusted source for data, support and education that can be applied to their own financial institution," Farrell added.