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How to Capture the Next Generation of Investors


Look around at your firm’s clientele. What do they look like?

For most advisory firms specializing in retirement planning, the demographic is typically older, wealthier Americans either already enjoying or quickly approaching retirement. It’s a good setup – but it isn’t necessarily sustainable.

In the next few decades, experts expect to see a large transfer of wealth from baby boomers to younger generations. But with big cultural differences between these groups, will your firm be able to keep that wealth in-house?

Let’s explore who these next generations are, what they expect from an advisory experience, and the top three ways you can capture their interest (and business).

Who is the Next-Gen Investor?

Baby boomers own more than half of all U.S. wealth at a whopping 52.7%, but that number has been on a downtrend for years as they enter the decumulation phase of life rather than accumulation phase. As boomers age out of retirement, younger generations will continue to inherit and build wealth, making them prime prospects for advisory firms.
There are three up-and-coming groups of next-gen investors: Gen X, Millennials and Gen Z.

Gen X

Age range: Gen Xers were born between the years of about 1965 to 1980. In 2022, that would make this generation somewhere around 42-57 years old.

Average net worth: $647,619

We’ve included this group as a Next-Gen investor because even though the upper end is nearing retirement, the lower end of the age range represent 15-25 years of additional working years. While global hardships have met many households financially, Gen X’s wealth is actually expanding. In 2020, Gen Xers reported a homeownership rate of 69%, outpacing their Millennial and Gen-Z counterparts. Overall, these investors are sitting pretty.

Millennials

Age range: Born between 1981 and 1996, the millennial generation is currently aged 26-41.

Average net worth: $127,793

Ah, Millennials. This generation has a complicated relationship with money – they need it to reach their goals, but often feel controlled by it. Despite high financial anxiety, it’s estimated that Millennials will hold five times more wealth by 2030.

Gen Z

Age range: The youngest generation of upcoming investors is colloquially known as Gen Z. These individuals were born between 1997 and 2012. In 2022, you can find these teens and twenty-somethings just dipping their toes into the financial world.

Average net worth: $950 as of 2019

A large part of Gen Z is still too young to have garnered much wealth, but they shouldn’t be discounted. In fact, over half of this generation reports holding some kind of investment, yet only one in three reported feeling confident that they could correctly explain the stock market to a friend. Much like the Millennials of yesteryear, Gen Z will quickly come of age for serious advisor interest—and the best-prepared advisors should start planning now.

Why Do Next-Gen Investors Matter So Much?

Over the next several decades, advisors expect to see the Great Wealth Transfer – assets totalling over $30 trillion will be passed on from boomers to their inheritors.
It sounds great at first, but there’s a dark side to that transfer. The bad news? As many as 90% of next-generation clients fire their parents’ advisors in the first year after a parent’s death.

That’s why it’s important to begin catering to the next gen before the Great Wealth Transfer occurs. You need to start building those relationships and adapting to changing preferences early if you want to sustain your firm’s momentum long-term.

While you may have relied heavily on referrals for business in the past, studies show that next-gen investors are taking a different approach to choosing their advisors.
Things like authenticity, reasonable fees and a strong investment track record are taking priority in the minds of next-gen investors.

Top 3 Ways to Capture the Next-Generation Investor

If you want to stay ahead of the game and keep your client’s heirs interested in your services, it’s important to involve them early, embrace technology and invest in your marketing.

1. Involve Them Early

If your clients have children, invite them to come into your office and be a part of the financial planning process (with your client’s blessing, of course).

As you work together and build a relationship through their parents, you can slowly work to gain their trust and ultimately their future business.

2. Embrace Technology

The younger generations were raised surrounded by technology – it’s a part of everyday life for them. Using tech to reach these future prospects can boost your credibility as an expert in the field.

Whether it’s digitized check-ins, remote meetings, or a mobile app, younger investors will appreciate your tech know-how.

3. Invest in Marketing

The future of marketing is hyper-personalization, and you’ll need to start early to keep up with client expectations. Your marketing isn’t just a blog (although that’s important, too) – it’s the entire prospect and client experience.

There’s no end to how creative you can be with your marketing. Maybe you’ll start off your prospecting journey with Riskalyze’s proprietary lead gen questionnaire. Perhaps you’ll utilize voice marketing or boost your Google profile to get better results in local search. An investment in your marketing now can result in major gains down the road.

To capture the next generations of investors and grow your firm’s AUM in the long-term, it’s important to start making changes now – and Riskalyze is here to help.

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