FA Magazine December 2023 | Page 32

clients who have decided that they will never work with an advisor because an advisor does not add value . Notice that young consumers are not opposed to working with advisors — only 8 % said they were . In fact , more retirees said they had made up their mind to not hire an advisor ( 13 %). For the most part , young consumers are likely to hire one , they just need more money ( noted by 25 % of those under 25 years old and 29 % of those under 40 ).

Another misconception is that young consumers have a preference for working with “ young ” advisors . ( We purposefully didn ’ t define what “ young ” meant .) Ten percent of the youngest consumer group ( under 25 years old ) list “ young ” as one of the top three characteristics of an advisor they ’ d like to work with . Seven percent of those between 25 and 40 said a younger person was important . This is still very low when you remember that “ experienced ” is chosen by 52 % of the youngest consumers and is the undisputed first choice of every single consumer category . Young people want experienced advisors , too .

The different generations ’ searching and researching habits are also not as clear-cut as you might think .

For instance , it ’ s not only the young searching for help online . So are grandma and grandpa . While 55 % of the youngest consumers are likely to seek out their potential advisors on the internet , so are 47 % of those over 75 . And just as grandma will ask for a recommendation for an advisor from family and friends ( something said by 63 % of those over age 75 and said by 65 % of those over age 57 ) so will the young men and women : 60 % of people under age 40 begin by asking for recommendations .

But the age groups differ in the next step : While 50 % of the oldest consumers will seek out in-person meetings with potential advisors as the first part of their due diligence , only 20 % of the youngest consumers do that . They prefer more online research beforehand .

Prospects overwhelmingly want a CFP who has great investment returns . That ’ s likely to be discouraging news to financial planners , who are trying to focus on planning .

What also changes with age is the attitude toward solicitation . Later in life , consumers become much more skeptical about solicitations from advisors . When we ask consumers how they would react to an invitation to an advisor-sponsored event , only 22 % of the youngest consumers said they were skeptical while 61 % of those over 75 said they were , as were 48 % of those age 57 to 75 . This is also true about mailed materials — 35 % of the youngest consumers “ sometimes ” open them while only 15 % of the oldest do and 31 % of those in the 57-to-75 age bracket .

We in the advisory industry may very well be underestimating the degree to which younger consumers are interested in advice and may be badly overestimating how much those in the later stages of their life are interested in hiring an advisor if they have not done it yet .

Rich And Not So Much

Advisors have further misconceptions about how wealth influences the choices of prospective clients . Firms often define their target markets only by asset level . When they do , they miss important nuances .

Our sample was big enough to compare

Attitude Toward Working With An Advisor By Age Of Consumer

■ Under 25 ■ 25-40 ■ 41-56 ■ 57-75 ■ Over 75

50 %

52 % 50 %

30 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2023 WWW . FA-MAG . COM