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Nicsa | Preparing for the Next-Gen Client Base

Preparing for the Next-Gen Client Base

By Nicsa posted Dec 05, 2019

Affluent millennials — defined as individuals born from 1982 to 2000 who have $100,000 or more in investible assets — are a nascent but quickly expanding population, and learning how to successfully engage them is of increasing importance to asset management firms.

According to a recent study by Cogent Reports, more than a third of U.S. adults qualify as affluent investors. Millennials represent a whopping 15% of the total affluent investor population and nearly 20% of affluent investors with $100,000 to $500,000 in investible assets.

“These aren’t your average millennials,” said Linda York, Senior Vice President, Cogent Reports, Market Strategies International, during a recent #WebinarWednesday event. “The average household income of the affluent millennials … is upward of $228,000 per year.”

York kicked off the educational session, which explored insights on working with the next-generation client, with a review of the Cogent Reports research.

“One of the striking findings from our report this past year was that affluent investors, and in particular, affluent millennials, are searching for new places, new ways to invest their money other than the traditional mutual funds, CDs, and bank accounts,” she said. “In fact, we found that the millennial population is driving up the use of ETFs, separately managed accounts (SMAs), hedge funds, and other alternatives.”

The report also revealed that affluent millennial investors receive more than three times the typical outreach volume every month compared to all other generations. They also received more touches than ready-to-act investors.

“Those are the folks that are in the shopping mindset – but even in comparison to them, the millennials are showing much more activity in terms of the number and types of touches that they’re reporting and receiving from financial services providers,” York said.

Millennial investors are also eager for information and most open to digital communication. “We’re seeing that these digital touchpoints can be a real win in both situations: for the financial providers as well as their potential customers.”

Matt Schiffman, Principal, Broadridge Data & Analytics, highlighted findings from his organization’s national research study on understanding the next generation of investors.

“We found that the vast majority of millennials, roughly 69% that we surveyed, do not have or use an advisor,” Schiffman said. “And the gender split overwhelmingly is dominated by men, underscoring the need to bring more women into the conversation.”

When compared to other generations, Schiffman said millennials display vast differences in their views and attitudes toward financial advice. In terms of asset growth, millennials stand in stark contrast to their parents. “For them, it appears to be less about the stock market and more about entrepreneurship and buying into a business,” he said. “They’re also way more confident in robo-advice than previous generations.”

Millennials also anticipate receiving an inheritance more than any other generation. “Millennials have a measurable level of optimism with regards to inheriting some money, but given numerous studies on boomer spending habits, in concert with rising retirement costs like healthcare, you have to wonder if this is a well-founded, solid plan,” Schiffman said.

“Recognizing and acting on these emerging millennial trends will position financial advisors and the industry to attract and keep this huge generation of clients at a critical time in their wealth creation and loyalty-building stage,” he concluded.

NICSA would like to thank Broadridge for sponsoring this webinar. 

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