In this Section:

Understanding the Different Breed of Affluent Clients in Millennials

With affluent boomers heading into retirement and the gradual, but undeniable, decline of the once vaunted middle class, financial advisors have fewer opportunities to add assets under management.

One hot spot for advisors, though, is the next generation of high-net-worth and ultra-high-net-worth investors. These younger, more technologically driven prospects are the sons and daughters — even grandchildren in some instances — of highly affluent investors in their 60s, 70s and 80s.

According to U.S. Trust Insights on Wealth and Worth, children of affluent boomers can expect to receive “trillions” in inheritance wealth.  The nationwide study of 642 adults with at least $3 million in investable assets — including 37 percent with $3 million to $5 million, 31 percent with $5 million to $10 million, and 32 percent with more than $10 million — shows they have weathered the storm from the Great Recession and are ready to hand off assets to their children in the next decade.

Like most affluent investors, that next generation of HNW and UHNW investors offers a financial “sweet spot” for wealth managers. 

» By and large, investors with $100,000 to $1 million in assets are “affluent investors.” 

» The upper end of HNWI caps out at approximately $5 million. 

» More than $50 million in wealth classifies a client as an “UHNW investor.” 

A Different Breed Of Cat

Just know going in that the next generation of wealth is picky, especially those millennials who grew up fast in the heart of the Great Recession.

 “As an academic at a financial services college and a millennial myself, we bring a different perspective to financial advisors” says Adam Beck, director at the MassMutual Center for Special Needs. “In my view, student debt, urbanization and shifting views of family impact are influencing millennial financial decisions. For my parents’ generation, owning a home, having a steady job, owning a nice car and being able to provide for a family were key goals. Today, our career, savings and investing decisions are severely limited by high college and grad school debt, usually at very high interest rates.”

Those experiences — especially watching their parents lose jobs and health insurance and struggle financially during the Great Recession — have and will continue to shape younger clients’ views of finances and of financial advisors.

“Having witnessed two major asset bubbles — first in technology stocks and then later in the value of real estate — as well as a major financial crisis and the worst economic environment since the Great Depression, millennials have come to view the markets as something far different than what their parents might have envisioned,” says Chris Georgandellis, a financial planner with Exchange Capital Management in Ann Arbor, Mich.

Georgandellis says a high level of distrust for the established wealth management community is shared among those millennials. “The rise of the Internet and its ability to connect information and people has blown open what was once an opaque industry,” he adds. “Whereas in the past, unscrupulous managers and advisors might have flown under the radar, today a simple Google search can instantaneously reveal warning signs.”

Further, millennials no longer share the view of their parents’ generation that the stock market is an engine for wealth creation. “Having witnessed two major market implosions, millennials are wary of the traditional “all-stock, set-it-and-forget-it” approach to investing, he adds. 

Key Steps To Take

So what steps, specifically, should advisors take to win over a unique, skeptical, but ultimately asset-rich next generation of wealth?

Here are a few clues about what younger investors will expect if you want to win their business:

High net worth Gen X and Gen Y investors are embracing technology — A recent study from Millionaire Corner also says that young, affluent investors are “managing their finances on the go.” Sixty percent of high-net-worth investors ages 44 and younger — members of Generations X and Y — own a tablet or e-reader, compared to 47 percent of high net worth investors as a whole. In addition, about 70 percent of younger high net worth investors use their tablets to access personal account information, and more than 60 percent of younger high net worth investors use tablets to research investments, conduct trades and create financial plans. Wealth managers will need to embrace technology and social media too, if they expect to harness the next generation of wealth.

High-net-worth Gen X and Gen Y investors are looking at wealth strategies in revolutionary new ways — Financial advisors have a huge opportunity in proactively helping young, affluent investors manage their wealth with a wide variety of investments, including the new options that are coming, such as crowd-funding, impact investing and other value propositions that appeal to them.

High-net-worth Gen X and Gen Y investors are going global — Wealth managers will need to know what the new, young wealthy look like and where they live. In that regard, that new face of high net worth and ultra-high net worth is more international than in past decades. That means looking to overseas bourses such as Bombay and Beijing, as much as it does Boston or Boca Raton.

High-net-worth Gen X and Gen Y investors like to “go it alone” — Statistics show that young, affluent investors prefer to craft their own investment strategies. In fact, only 30 percent of such investors say they want to work with a financial advisor on a regular basis, and 65 percent want to be actively involved in the day-to-day management of their investments. That suggests taking a collaborative approach in your marketing pitch to younger clients, thus going with the flow instead of fighting an uphill battle against younger investors who want more control over their investments.

“Much like any other age cohort, younger investment clients are not a homogenous group when it comes to finances,” says Ryder Taff, a 28-year-old portfolio manager with New Perspectives, an investment advisory firm. “Some profess to have learned everything from their parents, some have no clue what they are doing, and some are very interested and active in keeping their finances in good shape. For the most part, though, millennials seem to have learned from their parents’ mistakes.”

While Taff sees plenty of middle-aged or retired people who have not fully learned the lessons of their financial mistakes, younger investors seem to understand them and have a strong desire to avoid mistakes they have seen others make. “They are not tied down by a lifetime of bad advice as older generations are,” he says.

That’s good advice for financial advisors looking to crack the code on the next generation of wealth. Use it — and all the tips above — to lay the foundation for your own next generation of wealth. 

Brian O’Connell is a former Wall Street bond trader and author of best-selling books, such as The 401k Millionaire. He’s a regular contributor to major media business platforms. He resides in Doylestown, Pa. Brian may be reached at [email protected]

Brian O’Connell is a former Wall Street bond trader, and author of the best-selling books The 401(k) Millionaire and CNBC Creating Wealth: An Investor’s Guide to Decoding the Market. He’s a regular contributor to major media business platforms, including CBS News,, and Bloomberg. Brian may be contacted at [email protected]

More from InsuranceNewsNet