Millennial Risk Aversion Puts Financial Advisors on Notice

Millennial Risk Aversion Puts Financial Advisors on Notice

Schwab report shows investors with long time horizons are the most conservative.

Wealth Management Editor
Reviewed by: Kent Thune
Edited by: Ron Day

The financial planning adage about putting time in the market versus trying to time the market might be lost on a younger generation of investors who, according to a new survey, have grown gun shy following a relatively brief period of economic turmoil. 

Millennial investors—who range in age from their late 20s to early 40s—on average have 45% of their portfolios allocated to fixed income and 55% in stocks, Schwab Asset Management says in a new report. They are also favoring gold ETFs such as the SPDR Gold Trust (GLD), according to a recent story. 

That allocation would be deemed conservative by most measures, but especially for a generation with a few decades of gainful employment ahead of it. 

Millennial Investors vs. Gen X Investors and Baby Boomers

By comparison, Gen X investors average a 37% bond allocation and 63% in stocks. Baby Boomers stand out as the most aggressive with average portfolio weightings of 31% in bonds and 69% in stocks. 

David Botset, head of equity product management and innovation at Schwab Asset Management, attributed the aggressive allocation by boomers as an attempt to catch up. But risk aversion expressed by the youngest investor cohort stands out as an unsolved riddle. 

“Fixed income is more attractive in this environment, but you also have to understand what younger investors have been through in a relatively short period of time and how that might lead to more conservative allocations,” Botset said.  

Considering the period millennials have lived through, one could go back to the dot-com bubble in 2000, then through the 9/11 terror attacks and finally the 2008-’09 financial crisis and Great Recession. The trail then continues with the Covid pandemic and the banking failures of earlier this year.

Millennial Investor Risk Aversion Pattern

Beyond the broad data expressed in Schwab’s latest “ETFs and Beyond” report, financial advisors are seeing firsthand the risk-aversion pattern among a category of investors generally best positioned to embrace investment risks. 

Jack Heintzelman, financial planner at Boston Wealth Strategies, attributes the risk aversion to having “so much turmoil and challenge in this market.” 

In the wake of everything that led up to and including the Covid pandemic, he said, “there’s been constant economic uncertainty, geopolitical conflict, et cetera, that has scared [millennials] away from investing.” 

Sean Lovison, founder of the financial planning firm Purpose Built, offers an example of a 30-year-old acquaintance who is “heavily investing in Treasury bonds, waiting for a market downturn to diversify into equities. 

“While his logic appears sound, this strategy comes with its own risks,” he noted. “By playing it overly safe, he risks missing out on potential growth opportunities in the market.” 

Crystal Cox, senior vice president at Wealthspire Advisors, can relate to the risk-averse pattern because she is a millennial and considers herself a cautious person. 

“I’m a super-safe driver; I’m always being conservative and cautious,” she said. “However, I’m 100% in equity in my long-term investments.” 

Cox believes the choice comes down to education.  

“I’m completely comfortable taking risks in my portfolio because I know that, in the long run, stocks will outperform bonds,” she said. “And I have a long time horizon so what happens in between doesn't matter.” 

Christian Salomone, chief investment officer at Ballast Rock Private Wealth, has a slightly different take on the conservative trend among younger investors. 

“This generation is poised to make large single purchases like buying their first home, and that’s gotten harder to do, given prices and interest rates,” he said. “That has made them more conservative because they feel, rather than investing for retirement, they need to save for these more costly purchases.” 

Jeffrey Kleintop, chief global investment strategist at Schwab, sums up the trend as another example of where financial advice is needed. 

“We often think about financial advisors dealing with people in their 50s and 60s, but we’re now seeing proof that younger investors are more in need of financial advice,” he said. “History isn’t a perfect view of the future, but we’ve got 100 years of stock market history that shows the entry point matters less and less when you have a long time horizon.” 

Contact Jeff Benjamin at [email protected] and find him on X at @BenJiWriter.    

Jeff Benjamin is the wealth management editor at, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.

Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.

Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.