Irvin Ho, a 25-year-old business grad from Simon Fraser University, only recently started thinking about his financial goals. Two years ago, he put $10,000 in savings into a self-directed portfolio invested in index funds. Warming to the pastime, Ho, along with two friends, launched a website called Young Guys Finance that introduces the basic concepts of investing to their contemporaries via online video courses and boot camps at their alma mater.
Ho admits his own portfolio’s performance is “not so good right now.” But he’s convinced of the value of do-it-yourself investing and wants to help others do it too. “I tell myself, You don’t have to look at it every day. You’re doing it for the long run, so stop looking at it!”
Within his generation, Ho is something of an exception. Millennials have not-so-quietly become the largest cohort in the Canadian workforce, but for many of those born in the 1980s and ’90s, the cut-off to contribute to one’s RRSP passes at the end of February without much fanfare. They don’t have a good grasp of the mechanics of retirement—even less than their elder co-workers had at the same age.
Almost a third of Canadians between the ages of 18 and 33 concede they are “not at all knowledgeable” about retirement savings plans, a recent survey by TD Bank found. Some of it could be chalked up to willful ignorance. More than 40% of respondents admitted to putting off learning about investing because they feel they’re stretched too thin to contribute. Another 28% said they were saving for other purposes.
That’s despite the fact that young workers face zigzagging career paths and fewer opportunities to participate in employer-sponsored pension plans than previous generations. As the TD study notes, they’re quite aware that they need to do more, yet this knowledge hasn’t spurred them to action. Another recent paper by CIBC indicated that those who do save are leaving much of their wealth in cash accounts that won’t even keep pace with inflation. “Strikingly, those under 35—the furthest away from retirement—are holding twice as much cash as those over the age of 65, about 33% versus 15%,” CIBC said in a release.
So what will it take for millennials to finally start investing for retirement? First, they must overcome their fears, says Toronto financial planner Shannon Lee Simmons, a millennial herself. “A lot of us graduated right into the  crash,” she notes. “Our investor appetites were like, ‘This is what it’s like?’”
Simmons believes young savers are likewise deterred by fees, which can easily consume the tiny returns of people starting out. Here, at least, there are a growing number of low-fee alternatives to the advisers and mutual funds most commonly used by earlier generations to nurture their nest eggs. Among the wave of financial technology companies attempting to challenge the hegemony of Canada’s Big Five banks are “robo-advisers,” such as Wealthsimple and WealthBar, whose platforms help clients create and maintain portfolios of mostly passive investments, such as exchange-traded funds, for fees in the neighbourhood of 1% of assets per year.
WealthBar is building a pipeline of millennial clients by offering them the option of stashing money in a no-fee savings account. The initial deposit is $500, and they’re meant to contribute a little bit each month until the balance reaches $5,000. After that, WealthBar reallocates the account balance into a portfolio of ETFs suited to their risk tolerance.
“This is the generation that orders prescription glasses on their phones,” says WealthBar co-founder Tea Nicola. “They seek convenience, transparency and social proof first and foremost. You just have to slowly but surely convince them and then educate them, and do it in a way that doesn’t come off salesy.”
Ho, of Young Guys Finance, thinks many of his generation would sooner consult their peers or an algorithm than an adviser. “If you DIY it, you get a better grasp of financial literacy. There’s more of a learning curve, but it’s more rewarding,” he says.
Vancouver app maker Voleo, meanwhile, is refreshing the investing club concept for the digital age by borrowing elements from gaming and social media. Chief executive officer Thomas Beattie says the major barriers to millennials’ investing are a lack of money and a lack of knowledge. “We believe we’ve successfully addressed those fears. You no longer need $10,000 to build a diversified portfolio—you need $1,000 and nine friends,” Beattie says.
The forthcoming app will allow groups of users to pool their funds. Anyone can propose a trade, but the majority has to vote in favour for the trade to proceed. However, there’s also a game-like side to the platform, in which an individual’s smart ideas, executed or not, earn them points toward their Voleo Score. They can then compare their score with others in the community and follow the app’s top performers to get investing ideas. “We believe we break down the knowledge barrier, because at first our users would be relying on the knowledge of their most experienced peers,” Beattie says. “They’ll be learning from those within the community.”
There are likewise signs millennials could be attracted to alternative assets, everything from community bonds to private startups. Just as they spearheaded the sharing economy and redefined what a company can look like (it doesn’t necessarily need assets), they could well put their own spin on investing, says CIBC economist Benjamin Tal. “If they eventually use this cash for something else, like investing in their own company or investing in other people’s companies—not in stocks, but an actual company—then it’s as optimal as investing in the stock market, or perhaps even moreso.”
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