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While advisors have their hands full working with their baby boomer clients, they may need to shift their focus to younger clients sooner than they planned.

RIAs expect 41% of their client base to consist of Gen-X and millennial clients in five years, according to the 2018 TD Ameritrade RIA Sentiment Survey.

“That’s only five years away,” said Kate Healy, managing director of Generation Next at TD Ameritrade Institutional during a podcast discussion of the data with Financial Planning. “Five years is coming very quickly … the time to start is now, and it’s very important for advisors to start paying attention.”

How are firms preparing? Many RIAs are adjusting their marketing and networking strategy, the data shows — 42% of respondents say they are actively making changes to how they reach out to younger clients.

Others cite changes to their retirement planning approach — nearly 40% of respondents are now advising 401(k) plan participants.

Tweaks are coming to other aspects of the business model as well, with more than 20% of respondents reporting lowering their asset minimums.

Advisors should also modify hiring practices. While many respondents recognize the need for shifts in their business strategies to prepare, 44% of advisors reported doing nothing to help build a NextGen talent pipeline — a key component in being able to handle younger clients.

Twenty-five percent of respondents say they see succession planning or hiring talent as key challenges and 22% said the shortage of young advisors is a hindrance to building their firm’s growth.

Click through to see the rest of the survey's findings.
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