On Friday, I left you with a teaser about the Millennial generation. Well, here is my follow up …
- Every sweeping cliché about Millennials – that they are addicted to the itch and twitch of immediate gratification, that they are not interested in participating in the casino stock market – is being sent to the generalization graveyard.
This notion of the feckless Millennial, living in their parents’ basement, not able to find good paying jobs, disconsolate, lazy, and poor has been around for a while. Stereotypical, yes, but as we are finding out, not true. I wrote a couple of weeks ago about the millenials buying up real estate to raise families and the reason they could do this is because they have good paying jobs. Now, we are finding out they also have money and are willing to put it to work in the market, and that is good news for the future of the market.
- Wealthfront – an online financial services start-up targeted squarely and unashamedly at Millennial wallets – raised $64 million last month. That’s on top of $35 million that venture firms plowed into the company earlier this year.
Of course, the Millenials would use an online financial service, so no big shakes there. The fascinating part above is that venture capital is finding its way to the investment portal, and that money is now coming fast for one simple reason – there is lots of money to be made on helping the Millennials put their money to work.
- Not just because of the success of Wealthfront – who has crossed $1 billion in assets under management – but also the growth of Betterment, LoanVest, and others who have a hungering eye on the $7 trillion in liquid assets that Millennials will have in their generational clutches within the next five years.
Did I read that right – $7 trillion in liquid assets? Considering that the entire US GDP is $16.5 trillion, well, that makes that $7 trillion Millennial a real pile of money. I get it that financial services catering to those who have that money are popping up and why venture capitalists would back the tech heavy startups, and I am impressed with how fast the whole process is moving.
- What’s particularly revelatory about the success of Wealthfront – they reached one billion in two-and half years, while it took Chuck Schwab six years to get there.–
Yup. We have a whole new generation growing up, getting jobs, investing in their future, and raising families, which brings to the fore a host of investment possibilities. At least Goldman Sachs is suggesting this is the case.
- Millennials are maturing into parenthood at a time of improving economic conditions, accelerating household formation and a recovery in the number of births. We believe this shift triggers two important spending catalysts: 1) a cyclical increase in child-related expenditures like onesies, diapers, and infant formula, 2) a secular trend towards brands and business models that align with this generation’s unique set of values (with the potential spillover effect on spending for the entire family).
There is a lot of potential investment opportunity in the above, as well as fascinating sociological fodder. Yeh, the baby stuff is obvious, but what exactly is the “unique set of values,” and how would those lead to market opportunity.
At the top of the list is an unshakeable belief in technology, personal technology, and that starts with the smartphone, as it is rapidly becoming obvious that mobile computing is at the heart of the developing values of the Millennials.
- Millennials are the talk of the town. Now in their late 20s and 30s, they’ve adopted digital like no other. Mobile is their choice. No surprise there. Forecasts indicate that mobile will outpace all other forms of digital advertising. Skyrocketing sales of new smartphones, an explosion in the number of apps and the growing influence of the millennial generation are coming together like never before.
Ultimately, though, values come from nurture, not nature, and as it is with every generation in the modern age, separation from that which was and attachment to that which is becomes the bedrock of the value system.
- We know that Millennials are different than the generations before them. They have been described by The Pew Research Center as “forging a distinctive path,” “detached from institutions” and unattached from many of the traditions that have influenced earlier generations. Loyalty is hard won, questioning is the norm and proof is key. At the same time, they are closely networked with friends.
Yes, whatever is new, hot, and technological is for the Millenials, and each and every one of their “friends.” That would not be CBS television, movie theaters, traditional college paths, or, even laptop computers, for example. It would be TV on-demand, streaming movies on 60-inch hi-definition TVs, online colleges, and phablets. It would be these, and so much more.
Think Apple Watch, not Google Glass.
Trade in the day; invest in your life …
