Preview of Millennial Apocalyp$e
Summary—The Book in a 2 Minute Read
As the largest and most educated generation in American history, you and other millennials are equipped to shape the economy and control your destiny more effectively than any of your predecessors. Defined by Pew Research as those born between 1981 and 1996, your generation is larger than Generation X, who preceded you, and Baby Boomers, who fostered you. With greater diversity and gender equality than previous generations, you present a hopeful opportunity to shape our country with decision-making that is more collaborative and leadership that is more inclusive.
As powerful as these demographics are, even more impactful will be the generational characteristics that differentiate you and other millennials from your predecessors. Characteristics that differentiate you have been created by your upbringing, your engagement with the internet, and the impact of two recessions. These factors formed an environment that shaped your priorities and preferences differently than previous generations. Compared to other generations, you and other millennials show greater preference for immediate gratification, are more averse to risk, exhibit greater overconfidence, and often maintain a do-it-myself mentality. You are also more socially conscious than other generations. Collectively, these characteristics are already reshaping the composition and direction of the economy and the country.
Unfortunately, these characteristics also lead to poor investment decisions and unattractive investment results. This is important to a generation who, because of excessive student debt, poor job opportunities and delayed life decisions, lags previous generations in terms of savings, investment, and financial well-being. Catch-up will not be easy. Retirement may have to be delayed. Or lifestyles compromised. The potential lack of Social Security in its current form will further compromise your future economic prospects. Changes in savings and investment patterns are necessary if you are to avoid lifestyle compromises at retirement. Understanding those characteristics that are unique to you and many of your peers, and how those characteristics influence savings and investment will be vital to making changes now to assure your future financial security. This book is designed to create awareness of the financial difficulties that surround you, the personal characteristics that aggravate those difficulties, and how you can overcome deep seated behaviors to shift your current path toward a better financial destiny.
Finding Personal Relevance
Individuals born during a specific time share experiences, share thought processes, and develop characteristics that become unique to that cohort. The effects of these shared life experiences tend to persist over lifetimes. Those who grew up during the depression valued thrift throughout their lives. “A penny saved is a penny earned” was their generational mantra. Veterans of World War II returned with priorities of marriage, families, hard work and homeownership. The resulting economic boon and baby boom earned them the moniker of “The Greatest Generation.” In turn, characteristics that are evident in you and other millennials today will affect your decisions throughout your lives, collectively defining many aspects of your generation. This book makes it evident that one defining feature of millennial characteristics and the decisions they influence is flawed investment decisions. Left unchecked, these characteristics and the resulting decisions seem destined to compromise the financial well-being of a generation.
We begin this book by exploring how specific aspects of your environment have shaped characteristics and life decisions that are unique to you and other millennials. Key factors in that environment include your upbringing, the internet, and the recessions of 2008 and 2020. These experiences led many millennials, possibly including you, to delay life decisions of marriage, home purchase, and children. Life decisions to save and invest were subsequently delayed. This book explains how delays to life decisions such as these carry future financial consequences. To oversimplify, marriage, children and home ownership at age 25 means that 30 years later when the mortgage is paid and children are on their own, a couple then in their fifties has a decade of serious saving before retirement at 65. Delaying those life decisions ten years, as you and many of your peers have done, means that thirty years after you marry, buy a home, and have children, you are in your mid-sixties and there is no time left to save, unless you work well into your seventies. This is not the life scenario that you have in mind.
In addition to affecting life decisions, your environment also created characteristics that are specific to you and your cohorts. Components of your environment such as your upbringing, the internet, and the recessions of 2008 and 2020 produced generational characteristics that include overconfidence, aversion to risk, a preference for immediate gratification, a tilt toward self-reliance, and a shared social conscience. Like the delays to life decisions, these characteristics seem positioned to adversely impact your financial future. Each of these characteristics leads to investment behaviors that produce poor results. Taken together, these characteristics and delays to your life decisions uniquely combine to position you for financial difficulties at retirement. It becomes clear that changes need to be made now to shift an apparent trajectory toward financial insecurity.
After looking at your life decisions, your unique characteristics, and the bleak financial prospects they combine to create, we focus on solutions. We identify actions that can be taken to overcome the investment behaviors and tendencies, fostered by life decisions and characteristics, that seem destined to lead to poor investment results and financial insecurity.
The characteristics and life decisions that we explore are unique to you and your generation. They are supported by research. Yet they vary in degree among generation members. As a generation, you are overconfident, risk-averse, maintain a short-term perspective, and are socially conscious. Yet, as an individual, you may lack confidence, or you may be a risk-taker, have enviable long-term vision, or care little for the greater good. Accordingly, while this book is relevant to your generation, every aspect of this book may not be applicable to you. If you read this book cover to cover, you will certainly benefit. But if you have specific concerns or interests, the exploration of separate environmental influences and generational characteristics allows you to pursue more focused reading. The solutions to investment difficulties created by separate characteristics are also explored individually to permit a selective approach to reading this book. Thus, if you have special interests, you can read parts of this book, without feeling the need to read its entirety. If you have priorities for specific concerns can also focus on those areas first, rather than in the order presented. Whether read in whole or in part, we hope you come away with a better understanding of the factors that align to potentially lead you to financial apocalypse, and the steps that can be taken now to avoid that ultimatum.
Who Wrote This and Why
As an investment strategist talking with investors and advisors, Zane Brown has increasingly encountered concerns specific to you and other millennial investors. These concerns include circumstances that compromise you financially and traits that position you poorly as an investor. Nationwide, you and other millennial investors, your parents, and investment advisors corroborate concerns about your financial future. At the same time, psychology professor Dr. Donalee Brown’s interactions with millennial university students have revealed unique psychological traits resulting from specific aspects of your environment. As a licensed psychologist, Dr. Brown’s examination of those traits and the circumstances that help create them, suggests you and your peers are approaching life decisions differently than your predecessors. Importantly she finds that a generational preference to delay those decisions could have serious unintended consequences.
These two diverse perspectives, one economic and the other psychological, complement each other in understanding those conditions that could lead to future financial disaster for you and many other millennials. This book explores those conditions and identifies remedial action that can help avoid future financial disappointment. Combining the perspective of an investment professional with that of a licensed psychologist creates a comprehensive approach to the conclusions of this book and the insights that fostered them.
Zane Brown has spent over 40 years in the financial services industry, most recently as Portfolio Strategist and before that, Director of Fixed Income, at Lord Abbett & Co. LLC, a leading asset management firm with over $250 billion in assets.
Mr. Brown is a seasoned expert in the field of asset management with particular emphasis on investment strategy and economic analysis. He joined Lord Abbett in 1992 and became a Partner in 1996. Prior to Lord Abbett, Mr. Brown was an Executive Vice President at Equitable Capital Management Corp., and before that, Manager of the Bond Department at Brown Brothers Harriman and Co.
Mr. Brown has been featured in The Wall Street Journal, Financial Times, and Pensions & Investments, and has been interviewed frequently on CNN and CNBC, among other media, discussing interest rates, portfolio strategy, and Federal Reserve Board policies. He has published over 100 articles, white papers and financial industry economic forecasts. In addition, Mr. Brown is published with Dr. Donalee Brown in the Journal of Behavioral Finance.
Donalee Brown, Ph.D., is a licensed psychologist and full Professor Emerita of counseling and psychology at Fairleigh Dickinson University (FDU). Dr. Brown is former Director of the Clinical Mental Health Counseling master’s program at FDU. In addition to her research for this book, her current research interests include human trafficking and the mitigation of sexual harassment by the process of natural mentoring. Her clinical work has focused on forensic psychology, sexual trauma and incorporating Christian principles into psychology.
Her research and explanation of psychological phenomena prevalent among the millennial generation connects psychological biases such as overconfidence bias, self-control bias, delayed gratification, risk aversion, interpersonal trust, and anxiety related to traumatic events with millennial behavior. The understanding of these phenomenon informs the assessment of millennial behavioral characteristics, particularly as they impact financial decision making. Her insights and conclusions are based on empirically validated studies that provide an understanding of unique millennial behaviors and their financial decision-making repercussions.
It is the unique collaboration of these two authors, combining psychology and investment decision making, that supports the insights, conclusions, and suggestions in this book. It is their hope that you finish this book with increased awareness of the financial difficulties that you are positioned to face, a better understanding of why those difficulties exist, and a plan to redirect your path toward a better financial future.