Advisors who want to work with the next generation of millionaires will need to roll up their sleeves.
Members of Generations X and Y - people between 23 and 48 years old - who have $1 million or more in investable asset are more active in the markets, engaged in planning and philanthropy, informed, optimistic and collaborative than their baby boomer counterparts, according to a new survey by Fidelity Investments.
Wealth managers who want to work with this group are going to have to do more than investment management, says Bob Oros, executive vice president of RIA sales and relationship management for Fidelity Institutional Wealth Services. Younger millionaires are active traders, but also have many other interests and really want to someone to work with and validate their decisions. Advisors should be ready to shift to a more planning-oriented relationship.
Gen X/Y millionairesaverage 30 trades per month, according to the Fidelity Millionaire Outlook, and have the most positive financial outlook in the six-year history of the study. In addition, 61% of Gen X/Y millionaires make their own investment decisions, but work with at least one advisor for a second opinion.
Younger millionaires also rely on financial advisors for longer-term planning and are not as reliant as their older counterparts for advice on investment strategies, the survey shows.
Need for Planning and Philanthropy
While 73% of older investors receive general investment and portfolio management from their advisors, only 48% of Gen X/Y millionaires do. The younger millionaires are more likely to be interested in longer-term services, such as estate planning, gifting strategies, charitable giving and planning and retirement planning.
While the next generation of millionaires are more likely to feel wealthy than baby boomers - and own more vacation homes, boats and country club memberships they are also more generous, averaging $54,000 in donations to charity each year, compared to $12,000 for boomers.
Younger millionaires are also more likely to volunteer or serve on the board of a charity, the study finds.
This is a group of givers, Oros says. But they want input from advisors, who should be prepared to change their style of communication if they want a relationship with this type of client.
- How to Have the Money Talk With Kids
- What Next-Gen Advisors Want
- National RIA Brand a 'Foolish' Idea, Focus Financial's Adolf Says