- Across income levels, about half of millennials surveyed by Business Insider and Insider Intelligence said they turn to friends and family for financial advice.
- But not all said those friends and family were the most trustworthy source.
- Friends and family can be helpful, but when it comes to complicated matters like investing, it might be best to get a professional opinion.
- This article is part of a series focused on millennial financial empowerment called Master your Money.
It’s hard to talk about money. For generations, Americans have been conditioned to sidestep conversations about salary, spending habits, and the balance in our savings accounts. But millennials are changing that.
According to Business Insider and Insider Intelligence’s Master Your Money “Invest & Thrive Survey,” half of millennials (defined as those ages 21 to 38) said they turn to a friend, family member, or significant other for financial advice.
It’s not that millennials can’t afford professional help. In total, 1,023 survey respondents said they ask their family, friends, or partner, for financial advice, including:
- 21% of those earning less than $25,000
- 26% of those earning between $25,000 and $49,999
- 21% of those earning between $50,000 and $74,999
- 14% of those earning between $75,999 and $99,999
- 18% of those earning $100,000 or more
Of the total sample size of 2,020 millennials, the next most popular source of advice was the internet followed by financial advisers. Thirty-eight percent of respondents said they searched for free advice online, 24% said they went to a financial adviser at their bank or credit union, and 15% said they went to an independent adviser (respondents were able to choose more than one answer).
Yet the sources that millennials trust most don’t quite match up.
Some millennials who go to friends and family for advice don’t consider them trustworthy
It’s good that millennials are so willing to be open about money. In fact, increasing pay transparency (like sharing your salary and negotiation tips with coworkers) is one action we can take to begin to close gender and racial pay gaps.
But there’s a difference between sharing information and asking explicitly for advice. The “Invest & Thrive Survey” findings suggest many millennials recognize their friends and family might not be the best counsel.
Among respondents who said they seek financial advice — a total of 1,628 — only 29% said friends, family members, or a significant other was the most trustworthy source. An equal share said their bank or credit union’s financial adviser was most trustworthy, even though only about a quarter of total respondents (2,020 millennials) use them. Just 10% of respondents said free advice online was most trustworthy, despite 38% of total respondents saying they searched for it.
Financial advice can be tricky when it’s coming from someone who has an emotional stake in your life. Parents, siblings, friends, and even spouses may think they know what’s best for you. Plus, their advice can easily be colored by their own experiences.
But soliciting advice on larger-stakes aspects of your financial plan, like creating an investment strategy, can get complicated. A person’s risk tolerance (how much risk they can stomach) and risk capacity (how much money they can afford to risk) is unique to them.
For truly objective advice, millennials should consider working with a fiduciary financial adviser. They’re legally obligated to offer recommendations in the best interest of their client and either avoid or disclose conflicts of interest that could interfere with their advice. According to the survey, many millennials already know these professionals are trustworthy, so it might be a matter of just taking the plunge.