More assets and higher income is just part of the story for an incoming generation of millionaires
Millionaires of Generation X and Y are forecast to have more assets and income than previous generations of wealthy clients, creating unprecedented opportunity for advisors that want to capture their business. But their unique preferences and characteristics could also represent significant challenges.
In its 2017 Millionaire Outlook report, Fidelity Investments reported that today’s Generation X/Y millionaires stand to become tomorrow’s deca-millionaires, with greater average income (US$200,000 vs. $125,000) and assets (US$3.4 million vs. US$2.5 million) than their counterparts from the Boomer and older generations. They could also capture a considerable share of an estimated US$24-trillion wealth transfer as early as 2023, when their inheritances is forecast to surpass those of Baby Boomers.
The coming wave of wealth is also different in other ways. According to the report, Gen X/Y millionaires are more diverse compared to Baby Boomers and older generations, with more representation from females (44% in Gen X/Y vs. 32% in Baby Boomers+) and non-Caucasians (17% vs. 5%).
Technology was also a critical factor in advisor selection for them. More Generation X/Y millionaires (53%) than Baby Boomers (29%) said they would look for a new advisor if theirs weren’t using technology to enhance services; they identified lack of web access to their financial documents as a key area of frustration. And with access to online tools and resources, they also have a greater tendency to be self-directed, or validators with an investor, than delegators of investment decisions.
The report also found more challenges among newer millionaires. Compared to their older peers, they were more likely to have debt (68% vs. 42%) and support their children/grandchildren (61% vs. 20%) and their parents/grandparents (20% vs. 8%).
Fidelity found that Gen X/Y millionaires placed greater or equal value on advisory services than their Baby Boomer + counterparts, particularly for those that go beyond money management. These include functions that go toward achieving financial goals, achieving peace of mind, and fulfil their life goals and purpose.