income strategy

Planned Partnership

Three Things You Should Know about Millennial Participants under 30

NEW YORK, April 3, 2017 /PRNewswire/ — J.P. Morgan Asset Management Wednesday released a new Retirement Insights paper, “Three things to know about DC plan participants under 30.”

The research reveals defined contribution (DC) preferences among millennials under 30 to help plan sponsors and advisors put these youthful employees on a solid path to a financially secure retirement. Survey results indicate that members of this large and influential age group – working its way toward retirement for the next 35 to 45 years – are not only supportive of a more “automatic” DC plan, but that they expect their employers to play a vital role in helping them save and invest for retirement.

“Our research found that millennials under 30 typically need and also want guidance from their employers, and prefer a DC plan structured to simplify investment decisions,” said Catherine Peterson, Global Head of Insights Programs, J.P. Morgan Asset Management. “Getting these young employees on the right track now, early in their careers, can allow the benefits of consistent saving and age appropriate asset allocation to compound over their working lives. The good news is, those under 30 recognize the challenge they face in saving and investing for retirement and appear very receptive to the knowledge, tools and guidance that employers and advisors can provide.”

Key findings include:

  1. A majority identify as “do it for me” investors – The research shows that, despite their generally accepted reputation as self-assured and independent, those under 30 are more likely than those 30 and over to classify themselves as “do it for me” investors (69% vs. 56%). These younger investors say they want help selecting their investments and prefer to leave most of the ongoing investment decisions to experienced professionals (vs. “do it yourself” investors, who prefer to take a more hands-on approach). They are also more likely than those over 30 to appreciate receiving notifications from their employer if they are not saving enough (62% of those under 30 vs. 34% of those 30 and over).
  2. In general, they expect their employers to take some responsibility for helping them save and invest for retirement – These young employees, less experienced in managing their own finances – and admittedly a long way from retirement, are more likely to assign at least some degree of responsibility to their employers for helping them save for retirement (82% vs. 73% for those 30 and over). What’s more, half of those under 30 think their employer has an obligation to help them choose the right investments, compared with only 22% of their older colleagues.
  3. They are among the strongest proponents of the “automatic 401(k)” – J.P. Morgan’s Plan Sponsor research suggests that some plan sponsors may be reluctant to adopt the automatic 401(k)—a term we use here to refer to a plan that utilizes some combination of automatic plan features, qualified default investment alternatives (QDIAs) such as target date funds (TDFs), and re-enrollment—for fear of employee pushback.

Yet the participant research indicates an encouraging level of support among all employees, particularly with participants under 30, for these plan features, as well as asset allocation strategies, that may help automate and simplify employee retirement-related decisions. A large majority of those under 30 are in favor of or at least neutral toward automatic enrollment (84%) and automatic contribution escalation (86%), and the group is close to unanimous in its support of target date funds and re-enrollment.




About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under management of $1.5 trillion, is a global leader in investment management. J.P. Morgan Asset Management’s clients include institutions, retail investors and high net worth individuals in every major market throughout the world. J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity. JPMorgan Chase & Co. (NYSE: JPM), the parent company of J.P. Morgan Asset Management, is a leading global asset management firm with assets of approximately $2.5 trillion and operations worldwide. Information about JPMorgan Chase & Co. is available here.