Millennials don't feel like top priorities for advisers

The assets-under-management mentality of the advice business puts barrier between advisers and young, not wealthy investors

Apr 2, 2015 @ 12:45 pm

By Alessandra Malito

Young investors, with little money stored away for investing, don't think advisers consider them a top priority.

Given the assets-under-management mentality of many financial advisers, that sentiment should not be a big surprise. But by setting minimums, advisers are building boundaries between them and prospective younger clients — the next generation of wealth.

According to a new survey from Cerulli Associates, 20% of investors under the age of 30 said they did not feel as if they were a top priority client for advisers, and 31% of those between 30 and 39 agreed.

"When dealing with millennial clients, it shouldn't be about the assets — millennials need an adviser who invests in them today," said Douglas Boneparth, a certified financial planner in New York. "It has more to do with your potential and drive to reach your financial goals than anything else."

Some advisers say young investors need more financial planning than portfolio management, and have based their practices around the younger generations.

Most difficult part of working with advisers
• I don't feel that I am a top priority
• Finding a good adviser to work with
• Not sure advisers are recommending the best products
• Not sure I can trust advisers
• Advisers are too expensive
• Costs are not transparent; I don't know how much I'm paying
• Advisers use financial terms I don't understand
• Advisers don't communicate frequently enough
• Advisers are hard to reach
• Advisers don't understand my goals and needs


Eric Roberge, a certified financial planner and founder of Beyond Your Hammock in Salem, Mass., said he started his business with millennials in mind, even though many told him he wouldn't make a lot of money doing so. To steer clear of the AUM-based business model, he created a monthly subscription model for his clients.

"At a young age, your cash flow and your growth potential [are] huge, and the only way to invest money is to have money to invest," Mr. Roberge said. "Their concerns right now are not necessarily based on investment returns, so if you take that out of the equation, most financial planning firms don't know what to do. What I do is look at their cash flow."

There's another approach that can bring advisers and millennials together, and that involves advisers using digital advice platforms. Mr. Roberge, for example, uses Motif, an online platform that builds portfolios based on investment themes.


Scott Smith, a director at Cerulli Associates, said advisers can use these robo offerings "to provide investment advice to lower-net-worth households or individuals and use communications over the telephone or webchat, or Skype, to create relationships with these individuals."

What's more, using online tools may even benefit the advisers' relationships with older investors.

The Cerulli research found older, more affluent investors are just as likely to use mobile apps and the Internet to work with their advisers and monitor their investments: 41% of those who responded between the ages of 40-49 said they use mobile apps to access their account, followed by 58% in the 50-59 range, 60% in the 60-69 range and 58% for those above 70 years old.

"Advisers need to make sure their electronic offering isn't less than what you'd get with Google apps," Mr. Smith said. "That bar has been set so high by all these electronic interactions people have already."


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