Generation X and Y are warming up to investing more than any other age group, according to a survey by MFS Investments. But they remain largely reticent investors.

Thirty-six percent of Gen X, Y is willing to take on additional risk, more than any other age group. And 47% of this age group disagreed with the statement, “I will never feel comfortable investing in the stock market,” up from the 39% who disagreed with that statement in 2010.

In addition, 55% of Gen X, Y agree that a portfolio should include a sizable portion in international investments, compared to 40% of Boomers who think so and 36% of those age 65+.

Nonetheless, the younger age group has 30% of their portfolio in cash, more than any other age group, and a lower percentage in equities (34%) than older generations (Boomers, 36%; those 65+, 38%). Further, 22% of Gen X, Y said protecting their principal/not losing money is their top investing goal.

And 61% of Gen X and Y is not confident that they will have enough money for retirement, even though they have a median of 23 years until retirement. Forty-five percent of Gen X, Y are overwhelmed by all of the different investment choices available, and 42% say their need for financial advice has increased in the past year—far more than Boomers or those 65+.

“The data suggest that the financial services industry needs to re-think its approach to younger investors,” said William Finnegan, senior managing director of retail marketing for MFS. “Let’s put aside demographic labels that appear to color our impression and consider how to approach potential investors in their 30s and 40s.”

Finnegan added: “From their responses, we can see that Gen X/Y have accumulated significant assets, are willing to invest those assets, and have an increasing need for advice. However, their behavior and sentiment suggests that their needs are not being fully met by financial advisers."

On the other side of the spectrum, Baby Boomers appear to be equally worried, if not more so, about retirement. They have lower home equity than Gen X, Y, and 55% agree with the statement, “I’m more concerned than ever about being able to retire when I thought I would.”

Fifty percent of Boomers have lowered their expectations of what their life will be like in retirement, and 30% have developed lower risk tolerance over the past 12 months. And more Boomers than any other age group say the 2008/09 economic downturn affected them personally.

Boomers have an average of 26% of their portfolios in cash and are evenly split between their No. 1 investing goal, with 34% aiming to grow assets and 33% wanting to at least protect principal.

Only 13% of the Boomers have $1 million or more in household investable assets, with an average of 10 years left in the workplace.

“Boomers appear to be in a bind, knowing they need to save more for a retirement that is not far off, but they have a protective mindset driving their investing approach,” Finnegan said.

The survey was conducted in March by Research Collaborative among 596 investors and 610 advisers.

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