Are You Taking Advantage of This Generational Shift? – Episode 27
It’s no secret that advisors who want to serve wealthier clients need to go where the money is. Traditionally, that’s meant courting baby boomers.
Today, however, moving upmarket increasingly means attracting and serving younger generations. For example:
- Millennials represent the largest age demographic category—they are the clients of the future.
- Millennials are heading toward their prime earning years, professionally.
- Millennials and Gen Z-ers are inheriting significant wealth.
- Millennials and Gen Z-ers are interested in working with financial advisors.
CEG Insights recently surveyed more than 700 affluent millennials (along with more than 150 Gen Z-ers) about their wealth. What they told us may have major implications for how advisors manage their practices in the coming years.
KEY TAKEAWAYS
- Millennials, along with Gen Z-ers, represent significant opportunities in the coming years.
- Advisors should build relationships with these cohorts before they inherit wealth.
- Holistic wealth management appeals to these clients.
THE WEALTH TRANSFER IS UPON US
A significant portion of investors in the Gen Z and Millennial age groups have either inherited wealth already or anticipate inheriting wealth in the future.
- Overall, 31.6% of these investors have received an inheritance.
- Another 32.5% expect to inherit wealth in the future.
- Among Gen Z and Millennial investors with a net worth over $10 million, nearly two-thirds have already inherited wealth.
- The majority of those with a net worth over $1 million indicate that their inheritance comprises between 26% and 75% of their overall net worth.
THEY WANT TO WORK WITH YOU
For advisors, the opportunity to serve these investors is unmistakable. More than two-thirds of Millennials (68.9%) use a financial advisor, and more than half (58.9%) of Gen Z investors use a financial advisor.
That said, advisors may need to build relationships with these investors earlier than they think—before the assets are transferred. The reason: Upon inheriting wealth, almost half of Gen Z (45.7%) and Millennial (46.5%) investors started using the grantor’s advisor because they didn’t have their own, while only a quarter of Gen Z (25.7%) and a fifth of Millennials (20.2%) didn’t use the grantor’s advisor because they already had their own.
The upshot: Look to make inroads with your older clients’ children and grandchildren now, rather than expecting inheritors to look for different advisors from the ones who served their parents.
THEY WANT HELP IN MULTIPLE AREAS
Another piece of good news for advisors: Only about a third of Gen Z (36.0%) and Millennial (38.5%) investors feel very prepared for inheriting wealth, with a significant portion feeling only somewhat prepared or unsure.
As a result, they seek expert guidance and direction from their advisors during the inheritance process, with a focus on strategies for long-term wealth preservation. Half of all investors look to their advisors to provide such strategies, while 44.9% of Gen Z and 56.9% of Millennials specifically seek assistance on legal and tax matters.
Other areas of importance include getting assistance with family communication challenges, education support for heirs, and succession planning for a family-owned business.
Ultimately, then, they’re looking to you to provide them with a holistic wealth management experience that goes beyond simply investing or portfolio management.
THE TIME HAS COME
Once upon a time, many advisors could safely ignore these younger generations. But that time has passed. Today, advisors who want to set themselves up for success in the coming decades need to seriously consider the opportunity presented by millennials and Gen Z-ers—and how they can position themselves right now to start capturing it.
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