Financial advisers should focus on millennials, not baby boomers, says J.D. Power

Latest adviser satisfaction study finds most younger investors are dissatisfied

Apr 6, 2017 @ 2:23 pm

By InvestmentNews

For advisers looking for money in motion, it's time to stop concentrating on baby boomers and focus on attracting millennials — and retaining them.

That's the message in the results of the latest J.D. Power Full Service Investor Satisfaction Study, released on Thursday.

Millennials with $100,000 in investable assets currently control the largest portion of at-risk assets managed by traditional financial advisers, according to the study, and half of those investors (48%) say they "probably will" or "definitely will" leave their current firm and adviser, compared with just 8% among all other generations of investors.

(More: J.D. Power ranks top 10 financial firms by investor satisfaction)

While affluent millennials still represent just 8% of the overall available investable asset pool, they represent 55% of assets held by investors who are currently at risk of leaving their current investment firm, the research firm said.

Firms that can create loyalty among millennial clients today can expect significant ongoing rewards, J.D. Power said. Among those clients identified as highly likely to recommend, millennials made more positive recommendations during the past 12 months (an average of 8.1 per client) than did boomers (3.3 per client) and Gen X (3.7 per client) combined.

Millennials said they would be more likely to provide referrals if their adviser asked (40%) or they were incentivized to do so (39%).

(More: Millennials like blend of robo and human advice, though skeptical of advice generally)

Competition for millennial clients will be fierce, however, as 25% of millennial investors using a traditional firm have either tried, or are actively using, a robo-advisor platform. A significant 28% of them rate their satisfaction with robos higher than for their full-service firm. Also, more than one-third (34%) have a secondary self-directed account.

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