FRONTLINE
Are Advisors Prepared For Next-Gen Clients ?
Broker-dealers and mega-RIAs are worried that the aging advisory industry is not prepared for the next generation of advisory clients , young people who will inherit some $ 50 trillion over the next decade . Because so many advisors are already profitable and looking ahead to retirement , they have little interest in creating the strategies , pricing and staffing needed to ensure that their firms will stay competitive after they ’ re gone . That was the worry among top industry leaders at the Financial Services Institute ’ s OneVoice 2025 conference , which was held in late January in Dallas .
That means advisors preparing for the next generation will have to retool their practices to take into account younger clients ’ desired needs , wants and pricing strategies , which may be less profitable than the 1 % assets-under-management model advisors have grown accustomed to .
“ The challenge is taking an advisor ’ s really beautiful business model where you have 60 % profit margin and trying to get [ him or her ] to do something new ,” said Logan Galli , managing director and head of advisory sales and consulting at Cetera Financial Group , during a panel discussion .
“ We can make it easy to do business in a lot of different ways , but often just the inertia of advisors is getting in the way ,” Galli added . He said it ’ s tough to persuade successful advisors to devote more time to building out new services and a fee schedule to work with younger clients — especially when it means they ’ ll initially see a profit margin of only about 10 %. That ’ s doubly true when you consider the average age of advisors is 55 and many are currently thinking about retiring .
Even successful millennials , Gen X and Gen Y clients don ’ t — at least initially — favor
Advisors preparing for the next generation will have to retool their practices to take into account younger clients ’ desired needs , wants and pricing strategies , which may be less profitable . the annual AUM model for advisory services that their parents use , so when they inherit their parents ’ wealth , they may very well take their advisory business to another firm where they can pick and choose the services they want for a fee — especially a financial plan without investment management , something most advisors do not offer . In fact , only 25 % of advisors offer financial plans at all , according to Cetera research .
While baby boomers have largely saved for their entire lives hoping to check off items on their bucket list after they retire , younger generations don ’ t want to wait . They may instead be asking for help to afford doing things now : to take around-the-world trips in their 40s or 50s or quit their jobs and start a business or buy vacation homes early , said Kelly Lannan , senior vice president of emerging customers at Fidelity Investments .
“ How younger generations are spending their money is different from older generations . There isn ’ t necessarily that traditional linear life path [ nor are there ] distinct accumulation and distribution phases ,” Lannan said .
To prepare to win and retain younger clients , advisors will need to develop offerings they want at prices that are attractive , said Alyssa Palmero , director and head of relationship management at BNY Pershing .
“ What is your holistic offering , and how do you differentiate yourselves from competitors ? We did an investor insight study last year and [ found ] two-thirds of Gen Z and millennials said they want to work with firms that care about their short-term horizon and not just the long term . … We ’ ve seen firms change their charge structure as well and add alternatives and cryptos to bring in next-generation clients .
“ We also found that the largest driver for younger clients is when their financial advisors talk to them about every aspect of their life , since money impacts every aspect
12 | FINANCIAL ADVISOR MAGAZINE | MARCH 2025 WWW . FA-MAG . COM