Intelligent Advisor
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The Gulf Between Young Investors’ Priorities and Advisors’

With baby boomers entering retirement, advisors are looking at younger generations as the golden goose to continue driving growth and profitability.

A new study from Jefferson National found that the most successful advisors are focused on wooing Gen X and millennial clients. Advisors managing more than $250 million said Gen Xers are their primary target, while advisors who earn personal income of at least $500,000 are targeting millennials.

Yet while Gen X’s net worth is currently estimated at $11 trillion and expected to grow to $37 trillion by 2030, less than half are working with an advisor. Likewise, about half of the millennial generation, which owns $4 trillion and is expected to have $20 trillion by 2030, work with an advisor.

The gap may be explained by an incongruity between younger investors’ priorities and what advisors think their priorities are. Gen X and millennials named holistic planning, a fiduciary standard, lowered fees and socially responsible investing as their top priorities for choosing an advisor. But advisors are more worried about connecting through current client families and increasing their usage of social media and mobile technology, according to the study.

Advisors may also be failing to understand the real financial priorities of younger clients. Millennials are most worried about financing large expenses like a wedding or a vehicle, but only 8 percent of advisors named this as one of their clients’ top concerns. Behind saving for retirement, Gen X investors named taxes as a top priority, while only 22 percent of advisors said this is something that concerns their clients.

Instead, 40 percent of advisors said protecting assets was their clients’ top priority, while 31 percent named managing volatility.

Jefferson National’s “Advisor Authority” study, which surveyed 1,400 RIA, fee-based advisors and individual investors, makes clear that advisors aren’t in sync with the next generation. This will require a significant shift, but Laurence Greenberg, the president of Jefferson National, said advisors willing to change can create a more effective and valuable practice.

“Changing the business model into a mutually beneficial partnership between advisor and client, using the right combination of innovative technology and guided advice, and providing the right services for the client at the right stage in their life, can create greater value for investors at every level—and also create greater value for advisors at every level.”

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