Live! From TD Ameritrade Institutional: With money now – and more to come – Gen X and Y are ripe for advice

There are 2.18 million investors under 50 with $500,000 in their pockets.
APR 10, 2014
There is no time like the present for financial advisers to pick up a piece of the $28 trillion that Generations X and Y will control in a decade. In fact, one third of that is available now. Even though many advisers don't think younger investors are worth their time, there are 2.18 million investors under age 50 who have at least $500,000 or more to invest, according to TD Ameritrade managing director George Tamer. Those investors have an average account size of $1.6 million, he said at the TD Ameritrade Institutional national conference in Orlando, Fla., on Friday. The business opportunity lies in the fact that only 7% of Gen X are using registered investment advisers to manage their money, and only 4% of Gen Y are, he said. "There's a lot of people with a lot of money under the age of 50," Mr. Tamer said. "That's a tremendous amount of opportunity for an asset base that is going to continue to grow." Gen X, those born 1965 to 1979, and Millennials or Gen Y, people born 1980 to 2000, now control about $10 trillion in wealth and by 2023 they will inherit an additional $18 trillion from the baby boomers, according to Mr. Tamer. Advisers who have a base of younger clients also will see the multiple for which they can sell their businesses rise, he said. Attracting young, wealthy individuals and couples will require that advisers be referred by people they trust because younger people overall are more skeptical and can't be reached through cold calls, he said. Advisers should be talking to their clients about their adult children and grandchildren. "The only way you're going to get them is through family, friends, and trusted colleagues," Mr. Tamer said. Young investors are inclined to invest more conservatively than many would think because of the economic and finance industry turmoil they've seen in their lives, said Robert Fross, chief executive of Platinum Adviser Solutions and principal of Fross and Fross Wealth Management, and a conference attendee. "They watched this big erosion of wealth," with the impact of the recessions in the early 2000s and again more recently, he said. In helping advisory firms attract younger investors, Mr. Fross said advisers have to educate them on what saving and accumulation can mean over 20 and 30 years. Advisers also need to explain to young investors about the RIA business and show them how it's different than a wirehouse operation. Social media also is important to Gen X and Gen Y, but interviews with both groups showed that neither wants a relationship with an adviser to take place only online, Mr. Tamer said. Even young investors want a personal relationship, he said.

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