Don’t lump all younger high-net-worth clients together

It’s not wise for advisers to lump all high-net-worth individuals under age 50 into one group, according to a new survey. Advisers should recognize and capitalize on the different needs and priorities of Gen X versus millennials.
A report released by Global X Funds shows how people of the Gen X generation (which the study defines as those born between 1968-79) compare to those born after them when it comes to preferences for managing their finances. Advisers can use the comparison to build better relationships with each group.
The main point of contrast between high-net-worth Gen X-ers and millennials is their interest in robo-advice, according to the survey. Millennials (those born between 1980-95) are more comfortable getting advice from online automated platforms, while Gen X-ers prefer working with humans.
(More: Betterment reaches $5 billion mark, a first for independent robo-advisers)
In fact, it’s beneficial for advisers to regularly update their Gen X clients with detailed insights into their accounts, according to the survey by Global X, a sponsor of exchange-traded funds. They have shown a higher interest in issues of transparency and tax efficiency.
Gen X-ers also are more likely to have greater knowledge of different investment types, unlike millennials. The younger group, despite a weaker understanding, have high comfort levels with frequent trading and investing in a variety of financial instruments, the survey found.
Advisers can win the trust of their high-net-worth millennial clients by educating them about financial options and the potential pitfalls of overtrading when trying to quickly build a nest egg.
Jay Jacobs, director of research at Global X Funds, said these millennials’ goal to grow assets may even surpass other groups.
But “the way they are doing it is fighting against that goal, like trading more than 10 times a month,” he said. “There is a gap in education there which financial advisers can be successful in filling.”