Fidelity bridges the gap between aging advisors and young investors

According to Fidelity, 63% of young investors believe working with an advisor is key to achieving financial success.

Fidelity Investments is hoping to crack the code of how older financial advisors can attract younger clients, and a major step in that direction is changing the way the advisor community relates to a market of millennial and generation YZ investors.

“Our industry is approaching a transfer of wealth tipping point as younger investors look for an advice model that is different from what worked for their parents and grandparents,” said Anand Sekhar, vice president of Practice Management & Consulting at Fidelity Institutional.

“Advisors who don’t adapt to this shift also risk the overall longevity and valuation of their firm,” he added. “We want to help firms evolve their practices and empower them to embrace the growth opportunity that these next-generation investors provide.”

According to Fidelity’s research, 63% of investors in their 20s believe working with an advisor is key to achieving financial success and 60% feel a heightened need to engage a financial advisor this year due to economic uncertainty.

With 57% of existing client assets expected to pass to the next generation by 2045, this presents a significant growth opportunity for financial advisors and potential looming business vulnerability for those who do not prioritize engaging with this group, as firms with a younger client base are growing nearly 10 times faster than their peers, according to Fidelity.

The research also shows that nearly two-thirds of millennial and gen YZ investors believe working with a financial advisor is a key to financial success.

The problem, as Sekhar underscored, is the generational chasm between a financial advisor community with an average age of 65 and a swelling population of potential clients that are a few generations younger.

“We see advisors with clients that are not all that far from their own age,” he said. “Many of these advisors have been afraid of pursuing those younger investors, perhaps because they struggle with relatability.”

One area where Sekhar said advisors often miss the mark is by not reaching out and trying to market their services to the adult children of existing clients.

To that end, Fidelity has created a Young Investor Toolkit that includes a mix of self-serve and consultative resources.

Part of the generational gap begins with helping older advisors better relate to a generation of investors at the opposite end of older clients already in the asset preservation and decumulation stages.

Sekhar said one part of the toolkit is an investor readiness assessment that’s designed to help firms gauge how well they are addressing five key areas to evaluate for young investor growth and uncover opportunities to further strengthen their business. These areas include creating a sustainable approach, new technologies and digital presence, diverse talent and culture, modern product offerings, and evolving client engagement models.

While the idea of the gap between aging advisors and younger clients is not a new focus for financial services, industry consultants give Fidelity high marks for breaking it down and addressing specific issues within the larger problem.

“Fidelity’s research is spot on with what we are seeing day-to-day in our work,” said Lacy Garcia, founder and chief executive at Willow.

“Gen YZ investors are proactively seeking behavioral and financial coaching more so than previous generations,” she added. “It’s no secret that millennial and gen Z investors are digital-first when it comes to financial information; however, it is critical to understand that they are not digital-only.”

Megan Carpenter, chief executive of FiComm Partners, described Fidelity’s research as “validating.”

“Anecdotally we see the same thing in terms of advisors working with younger investors,” she said.

Carpenter said the advice industry has a “serious over-reliance on generational stereotypes” that is impeding growth and expansion to more diverse clients and markets.

While she recognizes the logic of trying to connect with the adult children of existing clients, Carpenter said that could lead to a less-productive box-checking exercise.

“That’s not the way to approach serving young investors,” she said. “Target marketing done at its best identifies a market that shares similar world views and perspectives and experiences. Targeting children isn’t really targeting a market. As an advisor you have to get really clear about who you’re targeting and understand why you’re targeting them.”

April Rudin, founder and chief executive of The Rudin Group, said she started her consulting firm 15 years ago with an eye on the same areas as the Fidelity research: wealth transfer, rising next-generation investors and technology.

“Most advisors are not skilled in business development regardless of their age,” she said. “While some of this offering might seem obvious to many observers, there is a gap between how advisors think of younger investors even though many of them have kids themselves. Fidelity is filling this gap with what seems to be an easy-to-use, engaging tool to connect those with knowledge to those who need it.”

Carpenter said even with the help of Fidelity’s toolkit to help older advisors better engage with younger prospects, “you can’t gloss over marketing fundamentals.”

Younger investors want experiences that add value and don’t feel like sales pitches, she said.

“They will be more likely to work with an advisor who is putting out content and fills a need they have,” Carpenter said. “That feels like my advisor has my back and is focused on developing relationships instead of selling.”


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