Engagement in financial planning drives
happiness, Wells Fargo’s new Positive Financial Indicator (PFI)
shows
Sixty-two percent of American millennials describe themselves as
very “happy” and 65 percent say their life is “meaningful,”
according to a new study published today by Wells Fargo &
Company. Although millennials are happy, 69 percent say they want
to get over their “anxiety” about money, and only a third say they
are “satisfied” with their financial life. In the face of financial
pressures, the study’s Positive Financial Indicator (PFI) shows
that millennials are happier when they take specific action with
their money and are engaged in financial planning.
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These findings are part a comprehensive study to gauge the
nature of millennial happiness, financial knowledge, and millennial
attitudes about career and relationships. Conducted by Harris Poll
June 16-29, 2017, on behalf of Wells Fargo, the results of the 2017
Wells Fargo Millennial Study are based on an online survey of 1,771
millennials (ages 20-36), 26 percent of whom are “affluent,” have
$100,000 or more in investable assets (earning a median personal
income of $88,000) and 74 percent of whom are non-affluent with
less than $100,000 in investable assets (earning a median personal
income of $43,000).
The study found that the millennial generation of more than 75
million Americans does not directly connect happiness to the
pursuit of money. In fact, 88 percent say they see success as more
about being “happy” and less about “material prosperity.” A quarter
of millennials say, “I don’t care about money.”
The study also found that across all millennials, men rate
themselves happier than do women (68 percent and 58 percent
respectively) on a seven-point scale.
“In this research, millennials have told us that love and family
are the keys to happiness,” said Kristi Mitchem, CEO of Wells Fargo
Asset Management. “However, the study also uncovered another driver
of happiness for millennials, and it revolves around action and
engagement with their financial lives. The more active this
generation is with their finances, the happier they are — and this
was proven out by the group of millennials who affirm all five
statements in what we are calling the ‘Positive Financial
Indicator.’ What’s interesting about this is it’s not clear that
millennials recognize how being proactive with finances leads to
happiness. We have an opportunity to explain that with this
study.”
Wells Fargo’s Positive Financial Indicator (PFI) – A Driver
of Happiness
In the Wells Fargo study, a group of five specific statements
(listed below) were highly correlated, and when looked at in
aggregate, is also a driver of happiness. Called the Positive
Financial Indicator (PFI), the five statements identify various
aspects of financial engagement that range from saving for
retirement to taking an active role in setting and achieving
financial goals. Out of the entire population, the 36 percent of
millennials who affirm all five aspects of engagement in the PFI
are happier than those who do not. (Note: Warren Cormier of
Boston Research Technologies conducted a multivariate analysis of
the data from the survey and found PFI as a driver of
happiness).
Other attributes of the 36 percent who affirm all five
statements are as follows:
- 55 percent are men and 45 percent are
women
- Men and women earn the same median personal
income of $63,000
- 33 percent of the group earn less than
$50,000
- 31 percent of the group fall between the
ages of 20 and 27 and 69 percent fall between ages of 28 and 36
(The table below indicates how many
millennials are engaging in these activities individually)
The PFI Statements:
AllMillennials
Women Men I have enough money to be able to save for
future needs 58% 51% 68% I am saving enough for retirement 58% 50%
68% I feel in control of my financial life 68% 62% 78% I take an
active role in setting and achieving goals for my financial life
83%
81%
87%
I am able to pay for my monthly expenses 85% 84% 87%
Top 2-Box Happiness
Millennials who rate themselves 6 to 7 on a 7-point agreement
scale
All millennials Total
Women Men “In general I consider myself happy” 62%
58% 68%
Millennials who affirm all 5 aspects of PFI
“In general I consider myself happy”
79%
74%
83%
Financial Pressures on Millennials
Millennials in the study were asked to rate areas of
satisfaction in their lives. The fewest were satisfied with their
“financial life” (among eight categories) with only 32 percent of
millennials saying they are satisfied, rating it a 6 or 7 on a
7-point scale. The highest rated area is “family relationships”
with 56 percent saying this gives them satisfaction.
Millennials face clear financial pressures:
AllMillennials
Affluent
Non-Affluent
AllWomen
AllMen
I have a significant amount of debt 46% 35% 50% 47% 45% I can’t
afford to pay for my healthcare 43% 35% 46% 44% 42% I rely
regularly on others for support (family, spouse, friends) 42% 44%
40% 42% 43%
“Millennials are facing significant debt and say their financial
life is generally not satisfying. Money is probably the area they
don’t want to grapple with. Yet if we can change this mindset and
expand the population of millennials who engage with their money,
they will reap the rewards of greater happiness — and at the same
time, put themselves on better financial footing. Taking a more
proactive stance with money is not necessarily dependent on having
more money. Millennials should start to engage as soon as they
start earning money and employers and financial service firms can
help push this effort forward,” said Mitchem.
Millennials and the Stock Market
The study found millennials have mixed feelings about the stock
market. Forty-one percent say they have “reduced investments” in
the stock market because of the effects of the Great Recession.
Invested in the stock market?
- 17 percent of millennials are not
currently invested in the market but “plan to in the future.”
- 20 percent of millennials are not
currently invested in the market and “never plan to be.”
- 53 percent of millennials say they will
“never be comfortable investing in the market.”
While some millennials do have concerns about investing in the
stock market, investors who were invested in the U.S. stock market
in March of 2009 would have realized a cumulative gain (including
dividends) of 190.7 percent on their investment at the close of
second quarter 2017, a period of more than eight years. For
illustrative purposes, if a 24-year-old started to invest $600 a
year ($50 a month) in March of 2009 in a total U.S. equity market
index fund, he/she would have $8901 at the end of second quarter
2017. (Source: Wells Fargo Investment Institute)
Effect of PFI on Investing in the Stock Market
Men and women who responded positively to all five statements in
the PFI were more likely to be invested in the stock market. Ninety
percent of the men in the PFI group and 78 percent of women are
invested in the market; this compares to 60 percent of men and 46
percent of women who do not affirm all five statements in the
PFI.
In addition, millennials who respond positively to all five
statements in the PFI are more bullish on the market, with 77
percent of men and 70 percent of women saying “despite it all, the
stock market is the best place to invest my money.” This compares
to 49 percent of men and 32 percent of women who do not affirm the
PFI.
“The percentage of total millennials who are not investing in
the market today is large. It’s important that we address this
straight on by showing the value of saving and investing for the
long term. However, we see the group that is taking action with
their money — our PFI group — is more likely to be invested in the
market and to say it is the ‘best place’ to invest. But even with
this group, women trail men in terms of their overall participation
in the market. More millennials — and particularly women — should
be in the market with a long-term investing strategy in place,”
said Mitchem.
Who is the Financial Decision-maker?
In addition to examining what women and men are doing to manage
their finances and investments, the study looked at how women and
men see themselves in terms of whether they are a primary or a
joint decision-maker for investments and long-term decisions such
as retirement planning. In contrast to the general population of
millennials, women who affirm all five statements in the PFI are
more likely to see themselves as a primary decision-maker.
All Millennials Women Men
Primary decision-maker 59% 82% Joint decision-maker 41% 18%
Affirm PFI (agree with all 5
questions)
Primary decision-maker 76% 89% Joint decision-maker 24% 11%
“When I see this data, it appears that when millennial women set
financial goals and take action with their money — those who affirm
the PFI — they are more likely to see themselves as the primary
decision maker in relation to financial planning. It’s important
for women to take an active role in financial decision-making, and
for them to see themselves in this role, rather than ceding
decisions to somebody else,” said Mitchem.
Working Millennial Men and Women: Earning, Saving and
Financial Confidence
Full-time employed millennials rate a fulfilling career as an
“important” part of their lives (94 percent), and 77 percent say
they are “happy to go to work each day.” However, 82 percent of
full-time employed men say they are “happy” going to work versus 72
percent of women who are employed full time.
Among all full-time employed millennials, women are earning a
median personal income that trails that of men, and they are saving
less on a monthly basis. However, income differences narrow between
men and women who are affluent and for those who affirm all five
statements in the PFI.
All Millennials (full-time employed)
Women Men Median personal income $43,000 $63,000
Median monthly saving $200 $500
Affluent Millennials
(full-time employed) Median personal income $88,000 $88,000 Median
monthly saving $675
$1,000
Affirm Five Statements of PFI (full time employed)
Median personal income $63,000 $63,000 Median Monthly Savings $500
$800
All millennial
Affluentmillennial
Affirm all 5PFI
statements
Women Men Women Men
Women Men “I am fully employed in my preferred
career” 46% 57% 63% 79% 66% 72% “I am confident my career will
provide me with financial security” 79% 87% 85% 92% 93% 98% “I know
everything I need to know to use my money
successfully”
43% 63% 53% 74% 66% 82%
“Men are more likely to say they are in their preferred career
and are more confident in their financial security than are women,
but things change and shift positively for women who are taking
greater action around their finances. The data shows they earn and
save more, although not as much as men, and they are also more
confident in their career choice and the financial future they are
striving for,” said Mitchem.
The Roots of Happiness and Satisfaction
A goal of the study was to uncover the roots of happiness among
millennials. Sixty-two percent of all millennials describe
themselves as “happy” (6 or 7 on a 7-point scale). The study
examined the factors that drive millennial happiness and feelings
of well-being.
Love and relationships are the top drivers of happiness for all
millennials. Respondents were given a choice of five words and
asked to select the word they most associate with happiness and
love took the top spot: “love” (62 percent), “doing good” (23
percent), “money” (10 percent), “work” (4 percent) and “power” (1
percent).
When asked to identify activities they actively engage in to
make themselves happier, family and friends are highest:
Top-3 actions that millennials actively engage in to make
themselves “happier”: Spending time with family 72% Spending
time with friends 61% Helping others 59%
Regarding satisfaction with select areas in life that bring
satisfaction, the three with the highest levels of satisfaction
among millennials are family relationships (56 percent),
intellectual life (52 percent) and recreation and hobbies (50
percent). About a third (32 percent) of millennials are “satisfied”
with their financial life and yet 98 percent of this generation
also says feeling “financially secure” is important to them, along
with feeling physically (97 percent) and mentally (97 percent)
healthy.
“It’s great to see the bright outlook of the millennial
generation and that happiness is about the deep bonds of friendship
and family, and not explicitly about money. At the same time, this
generation has a chance to become happier by taking specific
actions — such as saving and planning for the future — that will
benefit this group at large and lead to greater happiness,” said
Mitchem.
For more information about this study, visit
wellsfargofunds.com/generations.
About the Survey:
On behalf of Wells Fargo, Harris Poll conducted 1,771 online
interviews with American Millennials age 20 to 36 who identify as
either the primary or joint financial decision-maker for their
household. The survey was conducted from June 16-29, 2017. Data
were weighted as needed to represent the population of those
meeting the qualification criteria. Figures for education, age,
gender, race, ethnicity, region, household income, investable
assets, marital status, employment status, and number of adults in
the household were weighted where necessary to bring them in line
with their actual proportions in the population.
About Wells Fargo:
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
insurance, investments, mortgage, and consumer and commercial
finance through more than 8,500 locations, 13,000 ATMs, the
internet (wellsfargo.com) and mobile banking, and has offices in 42
countries and territories to support customers who conduct business
in the global economy. With approximately 271,000 team members,
Wells Fargo serves one in three households in the United States.
Wells Fargo & Company was ranked No. 25 on Fortune’s 2017
rankings of America’s largest corporations. News, insights and
perspectives from Wells Fargo are also available at
wellsfargo.com/stories
About Harris Poll:
Over the last 5 decades, Harris Polls have become media staples.
With comprehensive experience and precise technique in public
opinion polling, along with a proven track record of uncovering
consumers’ motivations and behaviors, The Harris Poll has gained
strong brand recognition around the world. The Harris Poll offers a
diverse portfolio of proprietary client solutions to transform
relevant insights into actionable foresight for a wide range of
industries including health care, technology, public affairs,
energy, telecommunications, financial services, insurance, media,
retail, restaurant, and consumer packaged goods. For more
information, contact us at ConsumerInsightsNAInfo@nielsen.com.
About Boston Research Technologies:
Boston Research Technologies is a strategic marketing research
firm founded in 1985 and specializes in consumer attitudes and
behaviors in the financial arena. The specific focus of BRT's
research is in decision modeling, applying advanced statistical
modeling techniques and behavioral finance concepts to experimental
design and analysis.
Wells Fargo Asset Management (WFAM) is a trade name used by the
asset management businesses of Wells Fargo & Company. Wells
Fargo Funds Management, LLC, a wholly owned subsidiary of Wells
Fargo & Company, provides investment advisory and
administrative services for Wells Fargo Funds. Other affiliates of
Wells Fargo & Company provide subadvisory and other services
for the funds. The funds are distributed by Wells Fargo Funds
Distributor, LLC, Member FINRA, an affiliate of Wells Fargo
& Company. Neither Wells Fargo Funds Distributor nor Wells
Fargo Funds Management holds fund shareholder accounts or assets.
This material is for general informational and educational purposes
only and is NOT intended to provide investment advice or a
recommendation of any kind—including a recommendation for any
specific investment, strategy, or plan.
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version on businesswire.com: http://www.businesswire.com/news/home/20170920005999/en/
Amy Hyland Jones,
704-383-4995Amy.hylandjones@wellsfargo.comPeter Greenley,
415-222-0102Peter.Greenley@wellsfargo.com
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