Boomers and WWII Investors Seek ‘Genuinely Interested’ Advisors

A new report also shows households with net worth topping $25 million are the fastest-growing segment of millionaires.

The number of wealthy households in the U.S. increased across all wealth levels in 2021, according to a new report Spectrem Group published in mid-March. The research also noted a sharp disconnect between how affluent younger and older investors think. And watch out: Although young clients with net worth of $500,000-plus are most likely to work with their parents’ advisor, they’re also most likely than any other wealth segment to think their parents’ advisors are too old.

According to the report, “Market Insights 2022,” households with net worth exceeding $25 million saw the greatest increase in number last year, 17.8%. Following were increases of 10.4% among ultra-high-net-worth households ($5 million to $25 million in net worth) and 8.1% among millionaire households ($1 million to $5 million). Another 800,000 households were added to the mass-affluent segment ($100,000 to $1 million) in 2021. Primary residences were not included in the net worth figures.

The total number of households in the different wealth categories is $25 million-plus households, 252,000; ultra-high-net-worth, 1.8 million; millionaire. 12.55 million; and mass affluent, 33.1 million.

A Stark Contrast

 Randy Wostratzky, a director with Spectrem Group, told Rethinking65 he feels one of the more interesting results Spectrem uncovered in this research conducted last year is that younger investors are much more likely to find value from a financial advisor regarding client appreciation events (19% of millennials and 14% of Gen Xers, compared with 3% of baby boomers and 1% of WWII investors).

“There is also quite a stark contrast when it comes to the percentage of older investors who value an advisor genuinely interested in their needs (73% of boomers and 71% of WWII investors), yet younger investors don’t hold this variable in quite the same high regard (52% of millennials and 46% of boomers),” he said.

Millennial and Gen X clients with $500,000-plus in net worth are more likely than their less-wealthy contemporaries to use their parents’ advisors (33%). Yet they were also more likely to say “My parents’ advisor is too old for me to work with” (22%) or “My parents’ advisor is old fashioned and not current with newer investments” (28%).

Additional Findings

  • A greater percentage of WWII investors (19%) and boomers (13%), compared with Gen Xers (6%), indicate they feel more financially secure from guaranteed monthly payments from an annuity or pension plan.
  • Most boomers (80%) and WWII investors (72%) value being able to use their advisor’s website to evaluate their portfolio performance — in line with millennials (71%) and Gen Xers (74%). Caveat: The research was conducted online, so these may be the more computer-savvy boomers and WWII investors.
  • Being within driving distance to their advisor is less important to baby boomers (52%) and WWII investors (49%) and GenXers (40%) than millennials (74%).
  • Reasonable fees are one of the most important variables for choosing and retaining a financial advisor for the majority of GenXers (64%), boomers (62%) and WWII investors (53%).
  • An advisor’s strong investment track record is important to 66% to 69% of GenXers, boomers and WWII investors, compared with just 52% of millennials. Competent personnel is an important factor when choosing or retaining an advisor for 46% to 50% of wealthy investors in these three older age groups but just 26% of millennials.
  • More WWII investors (14%) than boomers (10%) say an excellent online platform is one of the most important variables in choosing and retaining a financial advisor. This compares with 17% of GenXers and 37% of millennials.

Each year, Spectrem interviews more than 1,900 mass-affluent investors, 3,300 millionaire investors and 1,350 ultra-high-net-worth investors. In its latest report, its millionaire breakdown of respondents by age segment was as follows: millennials (6%); Gen X (22%), baby boomers (61%) and WWII (11%).

 

 

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