More investors are willing to pay for financial advice today compared to nine years ago when the nation was on the cusp of an economic recession, and a surprising demographic is proving to be the most inclined.
About 50% of investors said they were interested in paying for financial advice when they were polled in late 2016, up from 40% in 2008, according to a report by Cerulli Associates issued on Wednesday. Those with the most money proved to be more likely to be willing to pay for help, the recent survey found.
But when it comes to age, unexpectedly, more of the younger cohorts were willing to invest in advice.
“Investors under age 40 express the greatest keenness to pay for financial advice,” said Scott Smith, director at Boston-based Cerulli Associates.
Specifically, 79% of investors aged 30 to 39 were interested in paying for financial help, the survey found. These households likely are having their first encounters with intimidating financial events such as home ownership, marriage and caring for children, the report said.
About 73% of those under 30 said they were willing to pay for advice, compared to 54% of those 40 to 49, and about 44% of everyone 50 and older, the report found.
The results stand in contrast to the client demographics that the industry focuses on serving.
Most advisory firms seek out older clients because they have the greatest wealth and clients with low account balances tend not to provide enough revenue to run profitable businesses.
Many firms that do reach out to help younger investors offer cheaper digital platforms for investment and other planning guidance; however, that's not really what these investors want, the report from Cerulli said.
It would be more compelling for advisers to offer investors under 40 scalable, on-demand advisers from live advisers who can help investors with their challenging financial decisions, the report said.
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“Digital options have become part of the landscape but consumers facing complex decision processes repeatedly choose to include humans in their service selections,” Mr. Smith said. “A belief in the trustworthiness and expertise of providers is a crucial element of these relationships.”