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Rethinking investment messages that are hurting millennials

The financial services industry has the millennial generation figured out—or so it claims in study after study. It "hears" millennial Americans; it feels their pain.

Graduating with high levels of student debt into a troubled labor market, managing day-to-day cash-flow, and making constant trips to the Internet for angst-ridden credit checks define the life of the average 18- to 34-year-old American. Only one existential level removed from this uncertainty, the millennial generation may be the first in the U.S. to not live as well as the generation that preceded it.

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To what extent this superficial canvassing of millennials is accurate is a more complicated question—and one that will have a big impact on this generation's financial success.

Mitch Goldberg, financial advisor and president of ClientFirst Strategy, takes one thing away from all the surveys. Unfortunately, it's not positive.

"This generation … is not reachable with studies," said Goldberg. "This group isn't some science experiment or an Excel spreadsheet of statistics."

David Bennison | Flickr | Getty Images

Elliot Weissbluth, CEO of high-net-worth and institutional advisory firm HighTower, said, "People pick up something that sounds like it makes sense or has empirical basis, but it's not true. It needs to be scrutinized."

Let's briefly hit on some of the "truths" about millennials and then poke some holes where holes are long overdue.

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Here are five ways that millennials are being defined, along with suggestions for how millennials need to redefine themselves to create a better foundation for investing.

1. It's bleak out there, and it ain't getting any better. Millennials are, by and large, financially challenged. The student debt and unemployment numbers don't lie, and larger societal forces aren't kind, either, but what good does all of this bleak forecasting do?

"The idea is that it will scare them into action," said certified financial planner Erik Carter, who is senior resident financial planner at Financial Finesse. "Some people I've talked to say, 'I've heard all these things about my generation, and I want to do something.'"

Recent research on investor psychology, however, has shown that fear may be a better motivator for older Americans, while greed is the better trigger to get younger individuals to invest. If that's true, then all of this messaging about how tough it is—and will be in the future—for millennials won't necessarily spur them to action.

New message to millennials: It's tough out there, but what are you going to do about it? Knowing things are tough and hearing that message reinforced in the media is, if anything, just the thinnest of starts in dealing with the potential repercussions.

2. The 'unconventional' millennial conventional wisdom. Some millennials are taking action when it comes to personal finance and budgeting: The group has been highlighted for an unconventional lifestyle approach.

They are the first generation to come of age in the sharing economy, with ownership of material assets no longer the ultimate symbol of success. Many millennials no longer view living at home with their parents during adulthood as a stigma, for example.

Yet there's a fine line between proactive, unconventional activity to overcome financial challenges and being slowly but surely convinced by others that your generation, by definition, will have less. (This millennial "hardship" message also obscures the fact that plenty of millennials are getting really rich—thanks to Silicon Valley and social media. It might be a subset of the generation, but the list of millionaire millennials is growing rapidly.)

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There's been discussion of a paradigm shift in the idea of retirement, with younger generations conceiving of "life's work" rather than "life after work." It's great if people who are living longer than ever before have a career they are passionate about throughout their life; it's not so great if this turns out to be a euphemism for having to work later into life to make ends meet. As inherited wealth remains a much easier road than self-made success, this is a critical psychological distinction.

"There is a lot of truth in the generalization about millennials and strained finances," said Gary Mottola, research director at the Financial Industry Regulatory Authorit. "Expectations are pretty low from a financial standpoint, which potentially could help by motivating, or it could make them view themselves as not needing more."

New message to millennials: Don't settle for less because someone else says you may have to.

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