Significant demographic shifts are poised to reshape the economy in a multitude of ways, particularly for financial advisors. Global X ETFs, the New York-based provider of exchange-traded funds, released the results of its fourth annual survey of high net worth investors, “Beyond Baby Boomers,” which exposes key differences in financial tendencies between generations. The survey focused included Millennials (ages 21-39), Gen X (40-54), Baby Boomers (55-73), and Swing (74+).
As the number of robo-advisors offered by asset managers and advisors continues to balloon, 19% of Millennials surveyed expressed comfort with a robot managing their investments or money. Compared with 11% of Gen X respondents and 3% of Baby Boomer and Swing respondents, this makes Millennials the generation most comfortable with these tools, yet the comfort still remains with a minority. Further, Millennials tended to be the generation that was most likely to increase their usage of a financial advisor in the event of a major life event. Millennials were twice as likely as Baby Boomer and Swing investors to seek an advisor in the event of marriage (32%, versus 16% and 14% respectively), and roughly three times as likely in the event of a large purchase (37%, versus 13% and 10% respectively), and when having a child (29%, versus 11% and 10% respectively). Nearly two thirds (65%) of Millennials expressed interest in consulting with an advisor at any amount of investable assets, up to $1 million.
This comes in stark contrast to Baby Boomer and Swing investors, the generations who are either in or closest to retirement, who reported generally lower expectations to increase their advisor usage. Even in the event of retiring, only 27% of Baby Boomers and 21% of the Swing generation would seek to increase advisor usage. This leaves younger investors representing a significant portion of financial advisors’ potential future clients. The generation also reports the lowest level of knowledge about financial markets, at 75% expressing knowledge of financial markets, demonstrating a need for guidance and financial education.
“Millennials are a sought-after generation for advisors as they build their assets, but many believe they are only interested in robo-advisor services,” said Brian Diessner, head of sales at Global X. “What this data tells, though, is that Millennials are more nuanced in their needs and desires. While some will turn to robos, many have an interest in working with a human advisor to navigate financial markets, and that they feel they need guidance from a seasoned professional.”
When it comes to financial habits, 70% of all surveyed investors listed retirement planning as their primary investing goal, compared to the next-most reported priorities of growing a nest egg and investing as a hobby, at 35% and 34% respectively. Sixty-five percent of respondents felt confident in meeting their retirement goals, with 74% confident in meeting their goals for investing as a hobby.
All generations felt that politics had an impact on financial markets, with responses ranging from 61% to 65%, yet Millennials expressed the highest interest in trading more frequently during elections, at 27% answering in the affirmative. That is compared to 15% of Gen X, 10% of Baby Boomer, and 5% of Swing investors who expressed interest in doing so.