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

+ Zoom

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

SOME ADVISERS GET IT

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.

USE ROBOS

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."

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

AXA's Christine Nigro: How to handle being the only woman in the room

Women face unique challenges as they move into the C-suite, and they need to remember to always be themselves and let their professional strengths shine, according to Christine Nigro, vice chairman at AXA Advisors.

Video Spotlight

Will It Last As Long As Your Clients Do?

Sponsored by Prudential

Video Spotlight

The Catalyst

Sponsored by Pershing

Latest news & opinion

Labor's Alexander Acosta and SEC's Jay Clayton tell lawmakers they will work together on fiduciary rule

In separate appearances before Senate panels, the regulators stressed the cooperation that Republican legislators and opponents of the DOL fiduciary rule are demanding.

Brian Block denies cooking the books at Schorsch REIT

Former CFO claims everything he did was 'appropriate' and 'correct.'

Interns will take on several roles at advisory firms this summer

College students are helping with client prep, firm visioning and long-term projects, among other duties.

10 funds with largest 3-year outflows

Even well-managed funds that have beaten the S&P 500’s 10.1% average annual gain have watched investors flee.

Wirehouse training programs are back

At one time, major brokerage houses ran large, expensive training programs for thousands of young brokers, and now it looks as if they are about to return to that model.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print