As generational wealth transfers from older adults to younger people, and a wave of new investors emerge, it is increasingly vital for advisors to carefully consider their approach to engaging with clientele whose worldview greatly differs from that of their parents.
For advisors, who on average are 57 years old, getting on the same page as beneficiaries of their parents’ assets can be challenging. As such, many advisors are concerned about turnover in their client base — and rightfully so. One study from Ernst & Young has found that when assets change generations, firms typically lose between 70% and 80% of those assets.
Gen Z, the second-largest demographic in living history, is more tech-savvy than previous generations and most accustomed to using technology to manage their daily finances. The National Association of Personal Financial Advisors reports that almost 40% of Americans under 65 receive their financial advice online or from social media, while only 17% primarily use a financial advisor. Armed with a bottomless well of information at their fingertips, 62% of today’s 18- to 24-year-olds are already investing, and 57% are using apps to do so.
At the same time, research from the CFA Institute and the Financial Industry Regulatory Authority Inc. finds younger investors lack the confidence, education and financial literacy needed to make their best financial decisions.
Disclosures
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice.