Clients are Getting Younger and Younger

At this rate, don’t be surprised if toddlers start opening up retirement accounts.

The average wealth management client is in their 60s either approaching retirement or already in it, but a shift is underway as younger Americans have begun working with advisors. Some 28% of Gen Zers and 26% of millennials say they have gotten professional help from a financial advisor for the first time within the last year, according to a Northwestern Mutual report. Younger clients may not have the assets that older clients have, but when advisors start working with investors early, it can build strong relationships that last potentially decades. 

“Millennials and Gen Z are hungry for advice,” said Gregory Furer, CEO of Beratung Advisors. “They’ve been inundated with information their entire lives and are now seeking wisdom over noise.” 

The Young Bucks

Advisors typically take on older clients because they have high AUMs and wealth managers largely work on fee models based on assets. But today, many firms have begun working on flat-based fee models, making financial planning services more accessible to younger Americans. 

Rob Stromberg, founder of Mountain River Financial, said his firm calculates its fees based on clients’ total net worth as opposed to their investable assets. “You’re starting to see firms build toward more thoughtful and fair pricing, and that also gives us the opportunity to work with a lot of people who couldn’t previously get that advice,” Stromberg told Advisor Upside.

More than half of Americans agree that it is “highly important” or “critical” to get professional financial advice between the ages of 25 and 39, per the Northwestern survey. However, even if they’re not yet working with an advisor, more than eight in 10 millennials and Gen Zers are thinking about their financial health and what areas need improvement as they approach important life milestones:

• Younger Americans are most concerned with being able to afford a house with 46% of Gen Zers and 31% of millennials saying it is their top priority.
• After that, the next major concerns are having children, paying for college, and making large purchases like a boat or vacation home.

“Our youngest client is 22,” said Nathan Sebesta, owner of Access Wealth Strategies, adding that about 20% of his firm’s client base is under 40. “Historically, the industry overlooked younger investors, but that’s changing as advisors recognize long-term relationships often begin early. It’s a welcome and necessary evolution.”