Financial advisors are leaving millennials out in the cold when it comes to looking for more clients.
So says a new study conducted by Harris Poll for the Principal Financial Group, which revealed that only 18 percent of survey respondents target Generation Y as a source of new clients. Instead, they look for baby boomers (64 percent), the affluent or high-net-worth individuals (64 percent), or business owners (62 percent).
Considering that more than half of advisors (57 percent) prefer their new clients to have assets of more than $250,000, it’s no wonder they’re not spending a lot of time with millennials. But that could be a mistake, because millennials (ages 18-37) make up a 7 percent larger portion of the population than boomers and have plenty of years ahead to save for retirement and work toward other financial goals.
Still, it’s not just advisors who don’t work with millennials; the reverse is true, too, and not just for GenY folks. Only 30 percent of the population overall use advisors to help them get over the humps in their financial lives, and advisors say that some of the chief reasons for that are fees and costs (29 percent) and just plain fear (16 percent). Ten percent of those polled think they can do it themselves and 9 percent distrust financial professionals.
Advisors find fault with their clients, too, regardless of which generation they belong to. Twenty-two percent say that their clients live beyond their means; 15 percent say they don’t save enough; and 11 percent say they don’t start to save early enough during their working years. Saving is a sore spot, with more than half of advisors (52 percent) saying that no more than one out of every four clients has begun to save early enough in their career to manage to put away as much money for retirement as their advisors recommend.
“One of the biggest challenges advisors face is helping clients try to catch up when they didn’t start saving for retirement in the early years of their careers,” said Tim Minard, senior vice president of distribution at The Principal.
“This research illustrates the enormous opportunity for up-and-coming advisors to build relationships with underserved millennials, who are in a growing phase of their careers and income potential,” he said.