Where Affluent Millennial Investors Turn for Advice

Investors are starting to shift in the ways they invest, with more turning to so-called robo-advisers, according to Cogent Reports.

Affluent Millennials are the demographic most likely to have an adviser relationship, Julia Johnston-Ketterer, senior director at Cogent Reports/Market Strategies International, said during a webinar on Thursday. When it came to the actual portion of assets they park with an adviser, however, “they have the lowest percentage of assets” compared with other demographics.

“Millennials are dabblers,” Johnston-Ketterer observed, “with different products that they manage in different ways. They are most likely to be interested in products that grow wealth. It is a complex world with complex relationships.”

More than two-thirds (69%) use some kind of advice, a moderate increase from the previous year’s 66%, and Millennials, at 75%, have the largest percentage of advised investors of any generation. “This generation has intergenerational wealth invested professionally to manage the legacy assets,” Johnston-Ketterer explained.

Overwhelmingly, Millennials prefer a blend of active and passive management, Johnston-Ketterer pointed out, a trend the research firm will continue to track, along with risk-tolerance levels and where advised assets are kept.

Affluent investors, including Millennials, don’t always know and understand the term robo-advice, Johnston-Ketterer said. In its survey, Cogent defines the term as a financial services firm that provides advice based on a computerized model, instead of investors turning to a financial adviser or managing assets on their own.

Brand recognition is another key identifier Cogent is following, and noted that legacy brands—the top three are Vanguard, Fidelity and Schwab—clearly dominate investor choice. With nearly half of investors (49%) interested in “robo” services but unable to name a specific firm, Johnston-Ketterer said, “the market is up for grabs; the door is open.”

Other findings in the survey are:

• The average net worth of affluent investors stands at just over $900,000;
• Nearly one-third of affluent investors (31%) are completely self-directed, Cogent found, managing their assets with no professional assistance whatsoever;
• Just 11% of affluent investors have their assets managed exclusively by an investment professional; and
• Investors who have some advice relationship were just as anxious and uncertain after the financial downturn as those without a relationship.

More information about Cogent Report’s Investor Brandscape is on Cogent’s website.