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Millennial and Gen Z Wealth Grew by 25% in 2021: Cerulli

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What You Need to Know

  • Millennials and Gen Z together comprise the second-biggest generational cohort, but the smallest in terms of assets
  • As they accumulate wealth, they want more out of their financial advice relationship, though they have trouble defining exactly what.
  • Providers that have long served baby boomers and Gen X will need to focus on cultivating long-term relationships with younger households.

The collective financial wealth of millennials and Generation Z surged in 2021, rising from $2.9 trillion to $3.6 trillion, the most of any generation group, Cerulli Associates reported Wednesday.

Millennials and Gen Z together comprise the second-biggest generational cohort, but the smallest in terms of assets. But they have done as well as, or even better than, their older counterparts in growing their wealth. Millennials have made a serious commitment to saving for retirement, while Gen Z is testing the investing water through brokerage platforms.

As younger investors make strides early on in their investment journey, they are eager for comprehensive financial advice and are willing to pay for it, according to Cerulli. Yet, even though they want more out of their financial advice relationship, they have trouble defining exactly what that is.

“Rather than strategically choosing from a logical menu of potential services from each provider, investors more often end up selecting providers on a just-in-time basis, resulting in ad hoc collection of relationships, each of which falls short of delivering comprehensive financial advice engagement,” Cerulli’s director of advice relationships Scott Smith said in a statement.

To overcome this pitfall, providers must strive to anticipate each client’s evolving needs. As these investors accumulate more wealth, they will likely enter a stage of increasing financial complexity, navigating new challenges such as buying a home or saving for a college education.

“To retain these investors long term, providers will need to provide timely input on these crucial subjects or face expected attrition as consumers seek more holistic wealth management advice,” Smith said.

As they compete with one another, financial providers are increasingly focused on expanding services that were once the domain of affluent to mass-market households.

They do this either by leveraging technology to bring services, such as direct indexing to scale, or through mergers and acquisitions of retail brokerages or robo-advisors to create a pipeline for self-directed investors to receive more formal advice from the acquiring firm.

The report also suggested that providers that have long served baby boomers and Gen X will need to focus on cultivating long-term relationships with younger households as they grow older and their finances become more complex.

“While services are crucial, particularly as larger asset managers acquire smaller outfits to build out their capabilities, attention on the client-facing side, particularly on growing market share and mindshare among millennials and Generation Z, can’t be ignored,” Smith said.


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