Advisors are missing out by overlooking millennials, says a new survey by TD Ameritrade.

"Millennials who are of modest means, but on the right path to greater wealth, represent a largely untapped opportunity," the survey authors write, "yet they are largely overlooked by most financial firms."

Many in this group have not yet chosen advisors and are about to enter their peak earning years, the survey found. "You want to get to these folks before they begin working with someone else," says George Tamer, director of Strategic Relationships for TD Institutional.

In all, 67% of high earning survey respondents said they weren't yet working with an advisor, Tamer says.

To skeptical advisors, Tamer says he often poses the following question, "Do you want the client who is going to continue to contribute to their asset base over the next 30 years or that client who is going to take distributions from that base?"


Advisors may believe that millennials present a fundamentally different challenge than their parents or grandparents did, Tamer suggests. "People often have this perception that the generations are so different from each other," Tamer explains. "To some extent it's true. Gen Y is more tech savvy, and more confident.

"But how they think about money really doesn't change by generation," he adds. "They are still concerned about preserving their wealth. They are still concerned about saving for retirement. So a lot of the things that our clients have done well with their current clients translate to success with their future clients."


Conducted a year ago, the survey drew answers from 536 investors aged 18 to 39, focusing on those with more than $50,000 in investable assets. Key findings include the following:

Millennials who are already wealthy think differently. Among "potential high-net-worth" millennials -- those who have investable assets between $25,000 and $500,000 and an annual household income of $150,000 or more -- with an advisor, 55% hired their own advisor while 29% said they plan to keep their family's advisor. By comparison, 63% of the group identified as "high-net-worth" millennials (with $500,000 or more in investable assets) with an advisor said they kept their family's advisor and had no plans to change.

HNW millennials are more likely to use advisors than the high-potential group. The difference is stark:65% versus 33%. However, nearly 70% of potentially wealthy millennials want an advisor to help manage their finances.

Preferences for advisor age vary. The majority of potential HNW millennials seek out an advisor who is older, while the wealthier millennials showed a stronger preference for advisors their own age.

Wealthy millennials want many communications options. High-net-worth millennials favor a range of communications channels, from email and phone to in-person meetings and social media. Potentially wealthy and "mass affluent" millennials (investable assets of $25,000 to $500,000 and annual household income of $50,000 to $149,000) prefer email by a wide margin.

Definitions of "financial success" vary. For wealthy millennials, success means not depending on a job for income, having enough to indulge in luxury items and setting aside money for retirement and education. High-potential and mass affluent millennials are more concerned with having enough stashed away for a "comfortable" retirement.

Less-wealthy millennials are more optimistic. Nearly two-thirds of potentially wealthy millennials expressed optimism about their financial prospects, compared with half of the wealthy group. Wealthy millennials were more likely to be pessimistic about achieving their goals than the potentials: 26% versus 5%.

Hard work and smart investments are top priorities. All millennials rate "making smart investments" and "hard work" as key to acquiring wealth. The mass affluent and potential HNW groups also said being frugal is a top factor; their wealthier peers cited family connections and owning a business.

Less-wealthy millennials expect to work longer. The potentially wealthy expect to work longer, with an average retirement target age of 60.1 years, compared with 56.8 years among wealthy peers. The potentially HNW also anticipate needing to save more before they can retire: $5 million versus a $4.5 million target among the wealthy.

Top retirement concerns are consistent. Millennials worry about outliving their savings, needing to work longer and meeting health care expenses. Those in the wealthiest group were less worried, but mindful of the cost of caring for an elderly parent or relative.

Inheritance expectations differ. Nearly one in five of the potentially wealthy expect to inherit $100,000 or more, while nearly 40% of high-net-worth millennials said they expect to inherit that amount.

For more highlights and a detailed analysis of the Millionaires in the Making Survey, click here.

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