A comprehensive study by Envestnet and The Center for Generational Kinetics has provided new insights into the financial attitudes and strategies of affluent Americans, highlighting the changing dynamics in investment behavior across different generations.
Key findings of the study include a noticeable decrease in financial security among affluent Americans, with only 59% feeling financially secure in 2023 compared to 72% in 2022. This decline is attributed to increased market uncertainties and global economic changes.
Additionally, the study uncovered a growing concern about future financial security, with 62% of affluent Americans worried about their financial future, up from 46% in last year.
The research found that 54% of affluent Americans say recent fluctuations in the market have made them skeptical of investing. Drilling down into the reasons for this skepticism, the researchers found that among older generations market volatility is the leading challenge (64% for boomers and 57% for Gen X) while lack of knowledge or familiarity is cited as the leading challenge for millennials (45% for older millennials and 38% for younger millennials).
While older investors are maintaining their investment strategies but becoming more cautious in spending, younger investors are diversifying their portfolios and seeking more financial knowledge. The study also found that high-net-worth individuals and higher earners are particularly sensitive to the impact of taxes on their investments.
In terms of financial planning, generational differences emerged. Older affluent individuals often seek advice for life stages, wills, or trusts, while younger generations consult professionals for life changes, tax payments, and significant purchases. Retirement planning is a top priority for 79% of affluent Gen-Xers and 69% of boomers, whereas 33% of younger affluent investors focus on building a business.
The study highlights a strong preference for digital engagement, particularly among younger millennials and higher earners, emphasizing the importance of technology in managing finances. This trend suggests a need for financial advisors to blend technology with human insight to meet diverse client needs.
Trust in financial professionals remains strong, with advisors being the most trusted source of information on retirement planning, saving, and investing. This trust underscores the critical role financial advisors play in guiding affluent clients.
These insights, according to Rich Aneser, chief strategy officer at Envestnet, and Jason Dorsey, President of The Center for Generational Kinetics, underscore the evolving needs of affluent investors and the opportunities for advisors to tailor their services to different generations.
The study was conducted online with 1,500 U.S. participants aged 25-65, including those in high-earning and high-net-worth categories, and was weighted to reflect the 2020 U.S. Census demographics. The full findings are available in the “Unlock the Mindset of Today’s Affluent Investor: Opportunities in Generational Challenges for Advisors” study.
