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Why younger investors don't hire financial advisors — and how to win them over

Vise survey highlights opportunities of massive "Great Wealth Transfer" generational trend

Americans are in the beginning stages of a massive, generational transfer of wealth from older investors to their children over the next 20 years. New data shows that financial advisors who don’t take steps to appeal to younger investors may miss out on this unprecedented business-growth opportunity.

A new poll commissioned by Vise reveals that millennial investors (ages 26-41) have positive views about financial advisors in general, but they are unlikely to use them just because a family member did, and they have specific reasons for rejecting their parents’ advisors.

The sentiment is significant, since younger investors will be on the receiving end of $72.6 trillion over the next twenty years from the older Silent Generation and Baby Boomer generation.

This trend, dubbed the "Great Wealth Transfer," is the largest such transfer in history.

Here are some of the key findings from the Vise/ poll, conducted in March 2022.

Millennials highly value advisors' expertise

While younger investors may balk at retaining their parents’ advisors, they hold the profession in high esteem — millennials trust financial advisors more than family and friends and traditional Wall Street firms when it comes to financial advice:

And they know financial advisors can deliver results

The strong majority of millennials acknowledge that financial advisors are more knowledgeable about investing than they are:

Despite this, half would not use the same advisor as their parents

Question: “Would you use the same advisor as your parents?”

Younger investors give several reasons for this reluctance

Here are the top reasons given:

  • I want to manage my own money

  • Financial advisors cost too much money

  • Financial advisors are not in touch with my interests or values

  • I want an advisor my own age

This data confirms that advisors have a massive opportunity.

A historic wealth transfer is creating millions of younger investors who want and need financial advice.

But the old ways of doing things won't work. Younger investors are looking for advisors who can guide them in the specific ways they're looking for.

What advisors should do to capture next-generation wealth

Among the steps advisors can take 

  1. Embrace new communication modes aimed at client preferences

  2. Embrace education as a central part of relationship-building

  3. Shift your practice mindset to embrace values-based investing

  4. Explain your value proposition — in detail and with examples

  5. Shift meaningfully toward personalized offerings

Our free on-demand webinar, "Capturing the Next Generation of Wealth," provides a full playbook for taking the above steps and positioning advisors for next-generation wealth.

The webinar, based on Vise’s proprietary research and analysis, covers in detail the perceptions younger investors have about financial advisors, where those perceptions come from, and what concrete steps advisors can take to counter those perceptions and set themselves up for capturing next-generation wealth.

More data: The economy, inflation, and the pandemic

Among the other results of the Vise survey:

  • OPTIMISM: Millennials (58%) and the GenZ generation aged 25 and under (71%) have a more positive or neutral outlook on the U.S. economy than older generations. GenX, Boomers, and Silent Generation all showed over 50% negative responses.

  • INFLATION: One thing all generations agreed on was that inflation is the biggest factor influencing the current state of the U.S. economy. That’s no surprise, given inflation is the highest it’s been in over 40 years. However, GenZ once again thought differently, with nearly a quarter (23%) concerned about the war in Ukraine, and 25% focused on oil and gas prices. Other generations were mainly focused on the inflation issue. 

  • RUSSIA AND UKRAINE: When asked what they consider the biggest problem with the U.S. economy, GenZ (51%) overwhelmingly said Vladimir Putin, while millennials were evenly divided (28%) between the COVID-19 pandemic and Democratic policies being the biggest problems. 

  • PANDEMIC AND POLITICS: Millennials and GenZ are the only generations ranking the pandemic as a top problem, while GenX, Baby Boomers, and the Silent Generation (38%, 44%, 53%) all put more blame on Democratic policies than other factors.

The Vise/YouGov poll was conducted in March 2022 and included 3,000 respondents, who answered questions on a broad range of economic issues.

>> Watch our on-demand webinar on capturing next-generation wealth for more insights.

May 18, 2022