/For millennials, discontent and opportunity go hand in hand
For millennials, discontent and opportunity go hand in hand

For millennials, discontent and opportunity go hand in hand

If the last few decades were defined by the needs and wants of the boomer generation, it looks as though the next ten years will be heavily shaped both economically and politically by the millennials.

And that has us a little concerned, in part because more than a third of millennials believe the current economic system is failing them.

A recent poll conducted by YouGov and reported in MarketWatch showed that only half of millennials support capitalism, while 36 per cent approve of communism and an astounding 22 per cent believe “society would be better if all private property was abolished.”

Part of the issue is that while millennials are very well educated, that schooling isn’t translating into the same benefits enjoyed by previous generations.

According to the Pew Research Center, 40 per cent of people currently between the ages of 25 and 37 have a bachelor’s degree or higher. That compares to roughly a quarter of baby boomers and about three-in-ten Gen Xers when they were the same age. The good news is that the average income for those with a bachelor’s degree or more is the same as it was for a Gen Xer. For those without a degree, however, relative incomes have declined significantly.

The same report also shows that millennials have slightly less wealth than boomers and Gen Xers did at the same age with a median net worth of about $12,500 in 2016, compared with $20,700 for households headed by Boomers and $15,100 for Gen X households.

One would think savings rates would be higher given 15 per cent of millennials still live with their parents — that’s nearly nearly twice the rate of early boomers and six percentage points higher than young Gen Xers.

That said, while noticeable, we don’t think these gaps are material enough to warrant such a pessimistic view of capitalism.

We wonder if it’s a deeper rooted problem of this generation being unable to adapt to today’s rapidly changing environment where old strategies are proving not only unsuccessful but extremely frustrating.

Banks, for example, are cutting staff at a brisk pace, while technology firms are where the jobs are at.

Yet our education system remains focused on an old-world memorize-and-regurgitate model and less on case studies, human interaction and behavioural models which are much in need in today’s world. It doesn’t help that language courses are still plentiful while technological skills such as coding remain options if offered at all.

Unfortunately, this means those coming out of this system could find themselves replaced with disruptive forces such as artificial intelligence. And so years of schooling and tens of thousands of student loans are no longer paying dividends upon graduation like they did for previous generations.

For the uneducated, automation and robotics have been catastrophic with fewer jobs and lower wages. But for creative and energetic entrepreneurs willing to embrace the school of hard knocks, connectivity, the Internet of Things and platforms such as Shopify have created limitless opportunities.

Finally, with all of the efficiencies in this low-inflation, low-interest-rate environment the cost of living, quality of life and workplace flexibility have never been better. At the same time, financial innovations such ETFs, zero-cost trading and robo-advisors are creating platforms that never existed before allowing for greater and more efficient ways to grow one’s savings.

So while the millennials are bearing the brunt of today’s disruption, those brave enough to adapt will prosper like no other generation. It just means taking a different path than their parents or grandparents by embracing change. A great way to start is by leaving the ideals of the past behind and instead looking for ways to participate and even lead in the new global economy.

Martin Pelletier, CFA is a Portfolio Manager and OCIO at TriVest Wealth Counsel Ltd, a Calgary-based private client and institutional investment firm specializing in discretionary risk-managed portfolios as well as investment audit and oversight services.

Original Source