Holistic Advice Key to Winning Gen X, Millennial Trust

To win the business of Generation X and Millennials, registered investment advisers (RIAs) and fee-based advisers need to provide holistic advice and fiduciary support, according to the Jefferson National second annual “Advisor Authority Study.” They are also looking for advice delivered via leading-edge technology.

For advisers who managed $250 million or more, Gen Xers (ages 36 to 52) are their primary target. Advisers who earn $500,000 or more a year say that Millennials (ages 18 to 35) are their primary target.

With 10,000 Baby Boomers retiring each day over the next 19 years, advisers need to turn their attention to younger investors, Jefferson National says. Only 42% of Gen Xers and 52% of Millennials are working with advisers.

Asked why they work with advisers, 43% of Gen Xers say it is advisers’ years of experience, 37% say it is holistic advice, and 22% say it’s the use of a fee-based fiduciary standard as opposed to a commission-based sales model. Among Millennials, 32% say it is reducing fees, 31% say it is years of experience, 23% say it is socially responsible investing, 20% say it is holistic advice, and 17% say it is a fee-based fiduciary standard.

When advisers were asked how they plan to attract the next generation of investors, 36% say by working with current clients’ family and children, 36% say via social media and 26% say through mobile technology. Jefferson National says this shows a disconnect between what advisers perceive that younger investors want and what they are actually looking for: holistic planning, a fiduciary standard, lowering fees and socially responsible investing.

NEXT: Younger investors’ top financial concerns

While saving for retirement is a priority for investors across all generations, younger investors are focused on other things, as well. For Millennials, the top three financial concerns are financing a large expense, such as a wedding or a vehicle (31%), their children’s education (30%) and retirement (26%). For Gen X investors, it’s retirement (47%), taxes (30%) and their children’s education (22%). Baby Boomers, on the other hand, are completely focused on retirement, with their first priority being managing the cost of health care (40%), followed by protecting assets (35%) and generating reliable income during retirement (30%).

When asked what influences them to work with an adviser, both Millennials and Gen Xers point to enhancements to their websites, robust cyber security and mobile technology. Forty-five percent of Millennials—compared to only 19% of Gen X and 14% of Boomers—think that robo advisers can help manage the volatile market.

Asked how they would like to communicate with their adviser, Millennials first choose face-to-face interaction (22%), followed by email (21%) and phone calls (18%). For Gen X, it’s phone calls (36%), face-to-face (28%) and email (13%). Boomers prefer phone calls and face-to-face (both at 40%), and then email (11%).

“There is a tremendous opportunity shaping the future of financial advice, as an emerging market of younger investors continues to grow in numbers and to build their own wealth,” says Mitchell Caplan, chief executive officer of Jefferson National. “Our research shows how the most successful advisers are more proactive at working to bridge the divide and meet the distinct needs of the next generation.

The report comes on the heels of a Transamerica Center for Retirement Studies survey that found all generations are worried about having enough money in retirement.