The wealthier millennials are, the less likely they are to fire their parents' advisors, according to new reserach from TD Ameritrade. About two-thirds of high-net-worth millennials who are already using their families’ advisor have no plans on changing, compared to just a third of mass affluent millennials who say that's the case.
About 71 percent of HNW millennials (those with more than $500,000 in investable assets) are currently using their family’s financial advisor and 63 percent plan on continuing to stick with that advisor, according to results of TD Ameritrade’s Millionaires in the Making study,
Meanwhile, just a little over half of that number of mass affluent Millennial investors (40 percent) are still using their families’ financial advisor and only about 32 percent plan to retain that advisor. And about 49 percent of these less wealthy investors (mass affluent was classified as those with household assets between $50,000 and $150,000) are already using a different financial advisor than their families used.
The study, conducted by The Pert Group on behalf of TD Ameritrade, surveyed 536 investors between the ages of 18 and 39 through a telephone survey conducted in January and February of 2014. The study classified HNW investors as those with more than $500,000 worth of investable assets, potential HNW investors as having $150,000 or more; and mass affluent as having between $50,000 and $149,999.
Previous research conducted by Morgan Stanley and Campden Research in October showed about 49 percent of ultra-high-net-worth individuals under the age of 40 (who come from families with a minimum wealth of $25 million), say they’re extremely or very likely to continue using their parents' advisor. In 2012, a similar Campden survey showed that 62 percent of heirs said they were highly or somewhat likely to fire their parents’ advisor.
Going back even further, a 2009 study by Rothstein Kass found 86 percent of heirs with family offices said they planned to fire their parents’ advisor. In fact, the notion of children walking away from their parents’ financial advisors upon inheritance is ingrained in so much of the industry literature, it’s become for many an unquestionable fact.
“As you move down the wealth spectrum, while the problems are the same, their advisors are less able to afford the training they need on how to connect,” Vic Preisser, founding director of the Institute for Preparing Heirs, told WealthManagement.com in October. “The advisors to the very wealthy can afford to get the training on how to connect with the heirs.”