Millennials who are of modest means, but on the right path to greater wealth, represent a largely untapped opportunity for advisors looking for new clients, says TD Ameritrade.
High-potential millennials are more attractive clients than already-affluent peers, because they’re entering peak earning years and accumulating assets, yet they are largely overlooked by most financial firms, says TD Ameritrade. The potentially wealthy also are more likely to hire their own advisor than their wealthy peers, who typically already have an advisor and aren’t looking to switch.
Attracting this new generation may be critical to the investment advisor business, where fewer than 10% of clients are under 40 and half are over 60. Moreover, millennials are expected to inherit trillions of dollars from their baby boomers families.
TD’s Millionaires in the Making survey divided millennials into three groups:
High Net Worth Millennials have more than $500,000 to invest and are more likely to hire an advisor. Odds are they’ll retain their family’s advisor. Wealthy millennials are more inclined to seek an advisor who is a contemporary, rather than someone older, so attracting this group may require hiring young advisors. Nearly half of this group are women.
Potential High Net Worth Millennials have less than $500,000 to invest but earn more than $150,000 a year. These investors aren’t rich, but they’re building wealth and have prospects, like inheritance, that put them on an upward trajectory. This group is mostly overlooked by financial firms and may be inclined to hire their own advisor. This category is 62% female.
Mass-Affluent Millennials earn less than $150,000 and have less than $500,000 to invest. This group is worried about outliving their savings, meeting healthcare costs and having to work longer. Mass affluent millennials are less likely to hire an advisor, seeking financial guidance instead from family and friends.