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.
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.