Gen Z trails all generations in advisor loyalty, survey finds

More than half of Gen Z investors have seriously considered switching financial advisors in rates that show less advisor loyalty than other generations, according to a new survey from Betterment Advisor Solutions. 

While 53% of Gen Z investors have considered the switch, 18% have actually switched advisors. Betterment’s survey captured responses from 1,001 U.S. investors who have worked with a financial advisor for at least a year. 

Gen Z leads all generations in advisor transitions. Millennials had a 39% rate for considering switching advisors and 14% made the switch, followed by 18% of Gen X considering a move and 14% for Boomers. Only 4% of Gen X investors switched advisors and 6% of Boomers. 

“[Gen Z] investors have probably worked with their advisor for a shorter amount of time compared to older generations who may have a longstanding relationship that goes back decades, so it shows how critical it is for advisors to really have good touchpoints with those clients early and build strong relationships in the first several years that they're working together,” said Alison Considine, head of strategy and business development at Betterment Advisor Solutions. 

Betterment Advisor Solutions is the RIA custody arm of robo-advisor company Betterment. Surveyed investors reported between $10,000 and $30 million in investments with an advisor. Nearly two-thirds (63%) of both Gen Z and Millennial clients said a poor digital experience would influence their decision to switch advisors, which was more than twice the rate of Boomers who would switch due to technology. 

“Younger clients are really expecting advisor technology to keep pace with the technology that they use in every other area of their life,” Considine told InvestmentNews. “I think they're expecting the apps that they use to manage their money are as seamless as the apps they use everywhere else, whether it's Uber or DoorDash.” 

The survey found 75% of all investors use AI for financial tasks, such as looking up concepts or evaluating whether their advisor's fees justify their price. Despite the AI usage, only 3% of investors said they would consider replacing their advisor with an AI-powered alternative, and 76% say they’d still want a financial advisor even if AI could answer most of their financial questions. 

Another generational divide was found in the communications cadence between investors and their advisors. Gen Z clients communicate with their advisors at least monthly at a rate of 83%, compared to just 21% of Boomers. Monthly communication with advisors reached 74% for Millennial clients and 55% of Gen X. 

“Advisors can be adding more value to relationships with Gen Z and millennial clients, particularly during life transitions,” said Considine. “The area where people said they wanted more support from their advisor was around things like buying a home or changing jobs and navigating new stages of life.”