Close Close

Practice Management > Marketing and Communications > Social Media

Affluent Young Investors Plan to Allocate More to Advisors

Your article was successfully shared with the contacts you provided.

Despite the flow of assets to robo-advisors and a growing focus on fees, financial advisors can expect increased asset allocations from younger investors in coming years.

A new survey by Global X Funds, an exchange-traded-funds provider, shows that 64% of affluent millennials and 48% of well-off Gen Xers plan to allocate a bigger percentage of their assets to advisors over the next decade, compared with only 29% of a control group of investors.

Moreover, just 18% of millennials and 15% of Gen Xers plan to reduce their allocations to advisors during that period.  

The Global X survey, conducted during the first quarter, comprised 200 millennials, with more than $250,000 of investable assets; 200 Gen Xers, with more than $500,000 of investable assets; and 200 investors from the general population between the ages of 21 and 86, with $100,000 of investable assets. The latter served as a control group.

Eighty-five percent of millennials and 57% of Gen Xers in the poll reported that Donald Trump’s election had increased the likelihood that they would work with a financial advisor.

Which advisors are these investors most likely to seek out?

The survey showed that 93% of millennials and 71% of Gen Xers said they would most likely work with an advisor who had strong technological capabilities. Two-thirds of each group would expect an advisor to have an easily navigated website.

Other digital tools were also important, especially to the younger cohort. Sixty-one percent of millennials said they expected advisors to have a mobile app, and 50% expected them to have a social media presence.

Although only 44% of Gen X investors said they preferred an advisor to have a mobile app and 37% expected a social media presence, these percentages indicate preferences that were still material, according to Global X.

Asked how often they preferred to speak with their advisors, 78% of Gen Xers and 71% of millennials said they wanted to interact with their advisors quarterly or more often.

Eighty-three percent of the younger investors said they were connected with their financial advisor on Facebook, and 68% were connected on Instagram.

Gen Xers were less frequently connected with their advisors on these social media platforms — 64% on Facebook and 43% on Instagram — but the percentages were still material and should be noted, Global X said.

Recent research shows that more and more advisors acquire business through social media. Moreover, a digital divide is opening between advisors who embrace technology and those who do not.

“This year’s survey provides some surprising insights that question the conventional wisdom about the future of investing, including the assumed flow of assets to robo-advisors from two tech-savvy generations,” Global X’s director of research Jay Jacobs said in a statement.

“A key takeaway for financial advisors is that affluent younger investors still want personal interactions complemented by a set of technological tools at their disposal. However, specific investor preferences differ from generation to generation.”

Millennials’ most important expectation of an advisor was the ability to protect their investments during a market downturn, with 87% of those surveyed saying this was extremely or very important. Financial education was Gen Xers’ most important advisor offering, with 76% noting it as extremely or very important.

In terms of actionable investment strategies, 83% of millennials said they were extremely or very interested in thematic investing, compared with 61% of Gen Xers and just 31% of the general population.

Eighty-five percent of millennials said financial advisors should help investors in aligning their investments with their personal beliefs, versus 68% of Gen Xers. And 84% of millennials maintained that advisors play an important role in identifying unique growth opportunities, compared with 72% of Gen Xers.

— Check out Advisor Clients Bask in Glow of Financial Confidence: Study on ThinkAdvisor.