The rapid rise of Millennial, women and Gen X investors is reshaping the financial world

Millennials, women, Gen Xers and “hybrid investors” are the four groups that are growing most rapidly in the investing world and they are each driving major changes in the financial advising and asset management businesses, a new study from State Street Global Advisors finds.

The study highlighted three key themes across these investor groups: a strong desire for collaborative relationships with advisers, a heightened demand for modernized technology and tools, and a clear expectation of competitive fees aligned with a compelling value proposition, said Brie Williams, head of practice management at State Street STT , in a press release announcing the results.

Here’s a look at the study’s findings of how each group is reshaping the financial landscape:

Millennial investors

Born between 1981 and 1996, millennials are the fastest growing generation of investors, both in numbers and investable assets. Growing up alongside the internet, smart devices and social media, they navigate the digital landscape better than any generation prior.

“Millennials are transforming personal finance, prioritizing financial freedom and embracing innovative engagement solutions tailored to their preferences. With their tech-savvy and research-driven approach, they bring distinct expectations to the table. To remain relevant, advisors must adapt to this evolving landscape, leveraging customer experiences to meet the millennials’ needs,” Williams said.

Not surprisingly, 82% of millennials are hybrid or self-directed only investors, underscoring the significant influence of technology on their advisory preferences and financial decisions. They are also avid users of a range of self-service investing platforms. Nearly half of self-directed millennial investors rely on online tools and calculators for their investment decisions.

Women

Women are also one of the fastest growing investing segments due to the booming “SHEconomy,” managing over $10 trillion in total U.S. household financial assets. Their focus is mainly on retirement and long-term planning. With increasing financial influence and independence, women want to be even more engaged in their investment decision-making.

“Women investors are leading the charge towards financial empowerment, yet many still strive for greater security. Their journey is not one of despair, but of resilience in navigating the unique challenges they face on the path to financial well-being,” said Williams.

Also notable was how thorough self-directed women are in their approach to decision-making. Among self-directed investors, women were much more likely than male investors to use online tools and calculators to aid in their investment decisions. They were also more likely than men to say that access to financial planning tools was a benefit of using self-service platforms.

Generation X

Gen Xers stand at an investing crossroads, balancing retirement planning, wealth preservation, eldercare and support for minor (and sometimes adult) children, making goal planning a complex task. Despite what would appear to be a pressing need for guidance, Gen X investors are reluctant to seek financial planning services, with fees and a lack of perceived value holding them back.

More than half of Gen Xers are self-directed investors, often turning to online services and investment websites for market and investment insight. But nearly half of those self-directed investors report they are not getting the tools, recommendations or guidance that they would like.

Hybrid investors

Hybrid investors are a growing segment of investors who lean into the duality of personalized human advice and the convenience and cost-effectiveness of direct investing. As defined by this study, hybrids maintain a relationship with a traditional advisor alongside at least one self-directed account (self-service or robo platform).

“While 67% collaborate with an adviser on investment decisions, they remain empowered to oversee a portion of their portfolio independently. This collaborative approach allows them to benefit from their adviser’s guidance and expertise while maintaining a sense of control over their investments,” said Williams.

High advisory fees are a hot-button topic for hybrid investors. Since they have a high degree of confidence in selecting their own investments, they also have a heightened awareness of how much they paid for them, and the long-term impact of investment fees on returns. That puts pressure on advisers with noncompetitive fee structures.

1 common goal