Millennials constitute a demographic segment many financial advisors ignore — sometimes unwisely. To be sure, baby boomers and Gen Xers tend to have more wealth and typically are more receptive to advisors’ traditional investment-oriented appeals than millennials.
Why? Many millennials entered the workforce around the 2008 financial crash. As a result, they’re skeptical about the value of traditional investing, resulting in less than 30% of millennial wealth being invested in stocks and financial assets. Because millennials prefer cash and physical assets, advisors may be underestimating the total wealth of their younger clients and missing an opportunity to provide advice on the full range of millennials’ holdings.
Which physical assets are wealthy millennials acquiring? Art, with many favoring contemporary and emerging artists. As the latter can often be unusual — one popular emerging artist uses his own blood and others have incorporated taxidermy and food products — the resulting works often require expert care and preservation, not to mention attention to more traditional fire risks stemming from the use of combustible liquids like formaldehyde.
For advisors, this shift represents an opportunity to provide holistic advice, which younger investors prefer. Inquiring about your younger clients’ art preferences and collections and helping them connect with experienced professionals can help deepen your relationships and demonstrate value.
For clients with significant art investment, financial advisors need not become art or insurance experts. Rather, they should develop a basic knowledge and seek out expert guidance to assist in developing a plan for care, maintenance and preservation.
Clients who buy artwork made with novel materials, for example, often face unique care considerations. Pre-purchase, art conservators can help identify whether a piece contains unstable materials or has inherent structural issues. Conservators also can consult on ideal display conditions.