According to Cerulli Associates, the financial wealth of Millennials and Gen Zers jumped 25% in 2021, a higher rate than their Gen X and Baby Boomer counterparts.
Millennials (born between 1981 and 1996) and Generation Z (born between 1997 and 2012) saw their combined assets grow from $2.9 trillion to $3.6 trillion, according to a new study by the Boston-based research and consulting firm.
The overall wealth of these cohorts was unsurprisingly much lower than that of Gen Xers and baby boomers aged 40 to 74. By comparison, the aggregate assets of these generations grew by about 16% in 2021 to a combined total of $51.4 trillion, according to the research. However, the faster rate of wealth growth among Millennials and Gen Z shows that advisors need to start addressing the growing financial concerns of younger generations, including home ownership, student loans, and money. savings for their own children’s education.
“To retain these long-term investors, providers will need to provide timely information on these critical topics or face expected attrition as consumers seek more holistic advice on wealth management,” the director said. of Cerulli, Scott Smith, in a statement.
The report notes that Millennials are accumulating wealth by “seriously investing” in retirement accounts, while Gen Z investors are testing the water through brokerage platforms. However, how they get advice is important in reaching them, with more of this generation getting financial advice from social media such as Twitter (39%) and Reddit (19%). This far exceeds the average use of Twitter (11%) and Reddit (7%) for all age groups, according to a survey.
The younger generation is also tech-savvy, with 45% of respondents saying they would be comfortable with an online-only financial services platform.
However, younger, wealthier investors are still interested in human interaction when it comes to financial advice. About half (48%) of affluent respondents with investable assets over $250,000 say “lack of human interaction” is the biggest downside to fully automated online advisory platforms, according to the survey.
Gaining shares through technology, mergers and acquisitions
Affluent investors among younger generations are also seeking more investment advice than in the past, as global events and market volatility raise concerns, according to the study. Between 2018 and 2022, Cerulli saw the need for investment advice among affluent respondents rise from 34% to 44%.
To be competitive, Cerulli says advisers must look to expanded service offerings thanks to both advances in technology and increased services through mergers and acquisitions (M&A) between brokerages and robo-advisors. .
“While services are crucial, especially when large asset managers acquire smaller teams to grow their capabilities, the focus on the client side, particularly on growing market share and mindset among millennials and Gen Z, can’t be ignored,” Smith said.
The survey was conducted in monthly waves for the first six months of 2022. It had approximately 5,000 respondents representing affluent households with over $250,000 in investable assets and near-affluent households with over $125,000 in investable assets. family income.