A full quarter of affluent American
millennials are using or holding cryptocurrency. That’s among the findings in
the Millennials with Money report from Edelman.
The survey defines affluent
millennials as aged 24-38, making $100,000 in individual or joint income, or
having $50,000 in investable assets.
An additional 31% are interested in
using cryptocurrency.
The numbers surprised Deidre
Campbell, Edelman’s Global Chair of Financial Services. But, she adds, it’s not
a shocking figure to the millennials she speaks with.
“Anyone that has crypto tells me
they wish they bought it sooner,” she says.
Millennials also prefer cash more
than other generations. Campbell says that the strong habit of saving makes
millennials comfortable with risks associated with crypto. It should be noted
that it’s been a brutal
year for cryptocurrencies: after a huge run-up in 2017, so far this
year bitcoin is down
54%, while other coins like ether and litecoin have dropped further.
“It’s not inherently that they’re
riskier,” Campbell explained. “But rather, better supported with savings. So
they’re open to different opportunities.”
Campbell also says that because
millennials tend to be more skeptical of the financial services sector,
blockchain technology, upon which cryptocurrency is built, has appeal.
“I think it’s a sense of a younger
generation being open to more risk in their portfolio and willing to try new
things with crypto.”
A dark outlook
The report found that millennials –
and affluent millennials in particular – are wary of the financial
system.
More than three-quarters of affluent
millennials said that it’s “just a matter of time” before another financial
crisis hits. That’s compared to 58% of non-affluent millennials. They are also
more fearful of personal information being stolen. A full 75% are worried that
the global financial system will be hacked, compared to 58% of their
non-affluent counterparts.
A 2016 Facebook report found only 8% of millennials
surveyed trusted financial institutions to give them guidance. This general
distrust has given rise to saving and investing apps like Acorns, Robinhood,
and Stash. The low-cost and easy-to-use platforms have been particularly
appealing to millennials who shy away from more traditional investing methods.
It’s no surprise to Campbell that,
with such a dark outlook of financial institutions, nearly 75% of the affluent
millennials surveyed believe blockchain makes the global financial system more
secure.
“A lot of people have a hope that blockchain
will be a part of the answer for security and data security,” Campbell said.
(Blockchain is a decentralized distributed ledger that is open to the
public and can record transactions; it is the technology
that underpins bitcoin, and has other applications,
including in the financial
services area.)
Growing pessimism
The story was different two years
ago. Edelman’s 2016 report found that a staggering 82% of all millennials
trusted banks, compared to 64% of the general population.
But, Campbell says, a lot has
happened in two years.
“Geopolitical unrest is a near-daily
occurrence, and has replaced a more hopeful outlook,” she said. “Two years ago
we were talking about financial services regulatory reform. And there’s been
none of that conversation happening now — except for the unwinding. So I think
now, with the riskier environment we are living in – against a strong economy
and uncertainty in the markets – has caused that.”
And in two years time, Campbell says
the interest in crypto will only grow.
“I think it will definitely carry
on,” she predicted. “I think that we’ll see innovation that will leapfrog
crypto. I think the role of quantum computing along with AI [artificial
intelligence] will change our relationship with financial services even more
than it has.”
“They say millennials will also be
the smartest generation of investors because they’ve grown with different
fintech platforms,” she said. “They have more experience with their own money
because it’s accessible to them on their phone. It’s giving them more insight
and control into their financial future.”
But there is room for concern.
Many millennials are choosing to go
it alone when making financial decisions. Nearly half of non-affluent millennials
make decisions without help or advice. An additional 42% seek outside advice,
but then still make their own decisions.
“It’s a concern if they aren’t
getting professional financial advice,” Campbell said. “How will they get to
the next level?”
Click here for the original
article.