Millennial investor Stacey Cann, 30, bought a house in Edmonton in her 20s. Now her investments are made with an eye to retirement. She wants more of a say in her investments and an advisor who listens to her concerns.Amber Bracken/The Globe and Mail
Financial advisors need to be on their toes when millennial women come looking for help with investing and financial planning questions.
Confident, more engaged and well-informed are the terms advisors use to describe customers who are women under 35.
A 2015 Statscan study found that, unlike older women, university educated women under 35 years of age have the same level of financial competency as their male counterparts. And many of them are jumping into managing their finances in their 20s as they navigate without the lifetime employment security that their parents may have enjoyed.
A March CIBC survey by Ipsos Reid showed 46 per cent of women under 35 with investments were more likely to manage their own portfolios through online or discount brokerages.
"Women are actually better investors than men, predominately because of their demeanour and composure relative to men. Men tend to be overconfident in their own abilities and tend to make those emotional mistakes much more frequently than women," says Dave Nugent, chief investment officer at Wealthsimple, an online investment management company aimed directly at millennials.
"I would say more and more women are the ones that are CFO of the house, not just for investment but the sheer budgeting standpoint. More women are taking that role in the relationship," says Mr. Nugent.
Tyler Pfeiffer, an advisor at First Foundation mortgage and insurance brokers in Edmonton, says younger women come to his office well armed with research they have done before seeking financial help.
"I think they're still looking for that guidance but they might be more skeptical while previous generations were more trusting in what the advisor told them to do. They're asking more questions and pushing back against what people are saying to make sure it backs up the research they've done," says Mr. Pfeiffer.
Millennial investor Stacey Cann is one of those skeptical investors. The 30-year-old Edmontonian says she wants more of a say in her investments and an advisor who listens to her concerns. She would like to see more transparency about management fees. Her current advisor works for a big bank.
Ms. Cann bought a house in her 20s. Now her investments are made with an eye to retirement. Most of her jobs as an arts administrator have been contract work, so a company pension isn't in the offing.
"CPP isn't exactly going strong either. I doubt there'll be anything left in it," she says.
"More and more jobs are going the way of the short- or medium-term contracts so you don't get any benefits. I do keep a cash reserve in case there are in-between times in contracts. And as far as the house thing …yes that's great but if I didn't have to have a roommate to pay the mortgage, that would be even better."
Ms. Cann's strategies line up with advice from Katherine Wentzell, regional manager, Western Canada for RBC Global Asset Management. Ms. Wentzell recommends new millennial investors set goals, such as buying a house, establish timelines to reach the goals, create a rainy day fund and start saving in a retirement account.
"Saving 10 per cent of your income is a good starting point," according to Ms. Wentzell. She also recommends seeking help from an accredited advisor.
So what kind of investments are millennial women looking for?
Financial firms are finding the generation as a whole quite conservative in their financial dealings.
Ms. Cann says she is a probably mid range in terms of risk among millennials. She graduated from university in 2008, the year the market took a major dive. That year looms large in millennials' minds.
"One of the biggest challenges we face as a financial firm catering to millennials is to educate them on the value of time and the value of getting started and the value of saving," says Mr. Nugent at Wealthsimple. "The more we can educate them … that the longer they're invested, in a regular diversified portfolio, the better they'll be. Even if 2008 comes tomorrow they've got time [to recover]."
Mr. Nugent says Wealthsimple starts millennials in a more conservative portfolio than their long time line would normally allow so they won't be spooked by the normal ups and downs of the market.
"It's more important to get through that first downturn than to be in the most perfect, optimal portfolio for Day 1," he says.
Mr. Pfeiffer agrees, saying his firm eases new clients into their portfolios over the first year.
"A 26-year-old woman is still going to live 60 years so it gives them a lot of time to adjust how much they're putting away and what they're doing with it," he says.
In the Alberta market, Mr. Pfeiffer says home ownership is probably the No. 1 priority for his clients and he sees more single millennial women getting into the housing market than women of previous generations. After that, they get involved in their investment portfolios, and paying down student debt is the third priority.
Ms. Wentzell says RBC is seeing a lot of interest in tax-free savings accounts, which are flexible and can work in many stages of life as a foundation for an investment strategy.
Millennials are also particularly interested in environmental and socially responsible investing (SRI), says Mr. Nugent.
"People who invest with a purpose are actually behaviourally better investors because it's not purely based upon dollars and cents and profit," says Mr. Nugent.
He says it would be even more popular if the fees on SRIs came down and Wealthsimple, which doesn't manage the funds itself, would like to see partners start bringing down the cost of SRIs.
Ms. Cann says she does try to do some socially responsible investing.
"I'm not super keen about investing in the United States market. I got into a 30-minute, not argument, but conversation, with the financial advisor at the bank about that. Especially now, I would rather not support their economy in general."