A new study published by Facebook provides some insight into the financial attitudes, opinions and behavior of the Millennial generation. Facebook surveyed more than 27,000 people for its report and collected anonymous data from the Facebook conversations of more than 70 million users aged 21-34. The most tech-savvy and highly-educated generation ever is certainly changing the financial world, but Facebook found that it hasn’t necessarily been smooth for many Millennials.
According to the report, Millennials’ top financial priority is paying down debt (43%) followed closely by saving for the future (38%). Debt is a recurring theme for Millennials, and nearly half (46%) list becoming debt-free as their top indicator of success. Outside of eliminating debt, the next two biggest financial goals are owning a home (21%) and being able to retire (13%).
Another byproduct of Millennial debt is that many young professionals are not investing as much as they should. At a time in their lives when investing could be most advantageous, Millennials are 1.6 times more likely to have no financial investments than Gen Xers/Boomers. By far the most common explanation for this trend is that Millennials don’t feel they have enough money for investments (54%), with lack of investing knowledge (24%) a distant second.
Perhaps the most troubling insight in the survey is that many Millennials who are struggling financially don’t have a clear path forward. Although Facebook reports that an encouraging 86% of Millennials put money away each month, 53% of those surveyed have no financial plan or are unsure if they have one. More than half (52%) of these financially aimless Millennials without a long-term plan report that they don’t even know how they would go about creating a plan in the first place.
Distrust of banks
Perhaps it’s not surprising that, in the wake of the subprime mortgage crisis, a number of Millennials who witnessed firsthand how irresponsible behavior by bankers nearly collapsed the U.S. economy now distrust financial professionals. Facebook found that, while more than half (53%) of Millennials don’t know where they should turn for financial advice, only 8% trust financial institutions. Only 36% of Millennials talk to their parents about money, and a frustrated 33% of Millennials know that they could be investing their money better but don’t know exactly how.
While 60% of Millennials indicate that they would love nothing more than to trust their bank and share a partnership/friendship relationship, more than a third of those surveyed would describe their current bank as closer to a “used car salesman” or “aggressor” than a friend.
Trusting the alternatives
While Millennials clearly don’t trust banks, Facebook found that they have much more trust when it comes to alternative financial brands. In fact, nearly half (49%) report a willingness to consider financial services from trusted tech brands Google or Apple.
Millennials’ distrust of banks is not surprising considering the explosive growth in alternative finance in recent years. Online lenders, roboadvisors, neobanks and digital payment platforms are just some of the countless AltFi products and services that have taken the financial world by storm lately.
The bottom line
Millennials may not be on a firm financial footing just yet, but the Facebook survey shows that they are protective of their money and they want to maximize their returns, even if they’re not yet sure exactly how to do so. If banks want to keep this young generation on board, they may need to make some major changes to the way they do business or risk becoming obsolete in the face of growing AltFi competition.