The high-net-worth story is increasingly a Gen X story, according to Advicent COO Tony Stich.
HNW clients are the most profitable sector for financial advisors, as well as the fastest growing, Stich said. Most of those new HNW investors, though, are Gen Xers.
“What happened for advisors is they were focusing all their attention on baby boomers. Boomers required a great deal of white-glove or face-to-face service,” the COO said. “They were not an efficient customer.”
Then attention shifted to boomers’ children, the millennials, as the industry started thinking about the impending wealth transfer between the two generations, he said.
“Everyone’s thinking, ‘The wealth transfer is happening; we should be focusing on the millennials. How can we make them happy?’ All this time, the forgotten generation, the in-between generation, has been accumulating wealth quietly,” Stich explained.
They’ve been doing that with support from online platforms like Personal Capital and Wealthfront, he said, but that independence is baked into Generation X’s outlook and attitude.
Gen X is “the go-it-alone generation,” the COO explained. “They were latchkey kids. They’d come home from school and both their parents were at work.”
A generation of kids that grew up learning how to make their own snacks and do their own homework without parental supervision isn’t put out by having to plan their own finances — at least not at first.
Gen Xers who started out managing their own finances are now at a point where they want more sophisticated advice from a professional, according to Stich.
“‘I don’t want it a lot,’ they’re saying. ‘I don’t need to engage with a person all that often,’” Stich explained. “They don’t want to be sold. They want to deal with people only when they’re asking for it, but they have a high expectation of the digital side of things because they have been working with robo-advisors so long.”