The financial landscape is evolving, and so are the goals and preferences of young investors. According to a recent report by Cerulli Associates, it is evident that the financial aspirations of younger investors differ from those of their parents as just one-in-five affluent young investors continue to use their parents’ advisors. What’s more interesting is that an overwhelming majority of these investors chose their own advisor without considering the one their parents used. While they may be more risk-tolerant on average, they also express a desire for more active involvement in their finances.

Another notable generational financial finding from the report is that younger investors are increasingly seeking professional advice. They acknowledge the importance of having a written financial plan and recognize the value of expert guidance in navigating the complex world of investments. This shift signifies a growing awareness among young investors about the need for comprehensive financial strategies tailored to their unique circumstances.

Moreover, this generation seeks greater control over their investment decisions. They want to actively participate in shaping their financial future rather than relying solely on traditional methods or outdated practices. This desire for autonomy in this generational financial finding reflects their inclination towards taking charge and making informed choices.

Therefore, the burden is on advisors to build trust, demonstrate expertise, and offer personalized guidance to retain this new generation of investors. Advisors should be doing something different as compared to the advisors of the past. Investment strategies need to not only be tailored to the clients but offer a compelling differentiated approach. This could be utilizing a greater allocation to alternative investments in lieu of fixed income, something we generally advocate for provided the environment is favorable. Also, utilizing technology wherever it can be beneficial such as financial plans and investment performance reports that the clients can view electronically. Publishing timely updates and original thought pieces and utilizing alternative client communications, such as text message, is another important step to keep investors engaged.