Younger advisors are outpacing their elder peers in attracting AUM, according to a Fidelity study that surprised even its authors.

Gen X and Gen Y planners had an average of $8 million more in AUM in their practices compared to their baby boomer counterparts, according to the study, which surveyed 1,200 planners, from RIAs to wirehouses, last year. That discrepancy came as a surprise to the Fidelity researchers,  says Alexandra Taussig, a senior vice president with the Fidelity's National Financial division.

“It’s really kind of surprising given how many fewer years [the younger advisors] have spent in the industry,” Taussig said. “When we really looked at why that was, we found it was all about technology.”


Indeed, the study found that younger advisors are relying on technology to automate more tasks such as portfolio rebalancing; they're also meeting with clients via Skype instead of in person, Taussig says. The savings in time allows younger planners to spend more time building their businesses, she adds.

That squares with the experience of Gen X planner Ross Gerber, 42, cofounder of Gerber Kawasaki in Santa Monica, Calif. “Our entire business is online,” Gerber says, “so wherever we are in the world, we can manage client accounts. We can converse with clients. We also have the ability using Twitter and other means to communicate with them in an efficient manner.”

As a result, he and the other 17 advisors in his firm can spend more time on income-generating tasks and on relationship-building with clients, he says.


Gen Y planner Jason Wenk, 32, founder of Laguna Beach, Calif.-based Retirement Wealth Advisors, is another example. He stopped meeting clients in person several years ago. Now, he says, he attracts and works with all of them exclusively online.

By marketing himself through a host of blogs about annuity products, he’s built up a following, he says. On average, he claims, he brings in $2 million of new assets under management every month. 

For the purposes of the survey, Fidelity defined Gen X and Y advisors as age 47 and younger.

The study also found other factors, beyond technology, converging to help younger advisors build their practices, Taussig says.

“We feel like this new advisor is emerging who is younger and more likely to be in a team and more likely to be fee-based,” she said. “The teamed advisor and the fee-based advisor typically make much more income as well.” The survey also found that advisors in teams bring in more than one-third more revenue than soloists.


Fidelity has begun referring to the old and new guard as Advisor 1.0 and Advisor 2.0, she added. (Gerber and Wenk, who both work with teams of advisors, also fit the description of 2.0.)

Other characteristics of Advisor 2.0: She is more likely to be a woman and more likely to provide holistic planning, rather than serving purely as a stock picker, Taussig says. And because younger investors are more comfortable with technology and more involved in their finances than older clients, Advisor 2.0 planners have learned to work much more collaboratively with the clients, as well as with each other, she said.

The study found that clients of younger advisors behave more like “validators,” seeking assurance from advisors that they are making the right decisions. By contrast, clients of older advisors tend to be “delegators,” preferring less direct oversight of their investments, according to Taussig.

Younger advisors “are making sure their clients hit their goals. They are obviously looking for performance, but through a slightly different lens if you will,” she explains. “They give their clients peace of mind.”


On average, clients also tended to give younger planners three times as many referrals and 57% more of their assets to manage, according to the Fidelity data.

At Gerber Kawasaki, planners devote a significant amount of time to investors with fewer assets to manage. But those lower-net-worth clients are expected to make numerous referrals of other clients to the firm. 

Meanwhile, Taussig says, younger advisors seem to be forming solid connections with clients of their own generations. “The investors are showing their approval with their wallets,” she says. “It’s almost like a meeting of the mind between the new investor and the new advisor.”

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