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Millennials may be driving the expansion of robo-advisors and other do-it-yourself trading platforms, but the generation is also embracing relationships with financial advisors, a recent survey shows.
According to a recent AIG Life & Retirement study in the U.S., almost four in five of millennials (79 per cent) “have a greater desire to work closely with their financial professional, if they have one,” versus 59 per cent of Gen Xers and 18 per cent of baby boomers.
It’s not entirely surprising given that millennials – now in their mid-20s to early 40s – are at the stage in life at which they’ve accumulated some wealth and need help to grow and manage it.
The survey’s results are a reminder for advisors that they need to pay attention to the generation that’s not only growing their wealth but poised to inherit it from their baby boomer parents.
Ethan Astaneh, wealth advisor at Nicola Wealth Management Ltd. in Vancouver, says many millennials come to his firm in two ways – either they’ve received a large company bonus, such as stock-based compensation, or they’ve received a financial gift or an inheritance from a family member.
In both scenarios, millennial clients are looking for advice on how to manage and grow the assets.
“What really attracts them is the planning because investments have become commoditized, especially to this group,” he says.
Many millennials also have different planning needs. Instead of saving for a traditional retirement at age 60 or 65, many expect to work well into their 70s and 80s and are looking to build wealth in a way that enables them to enjoy their working years as well as their retirement. The approach requires more complex and sophisticated wealth planning strategies.
Still, Mr. Astaneh says many millennials continue to self-manage a portion of their wealth through easy-to-use online trading platforms, which have been designed largely to cater to their generation.
“The probability that I manage 100 per cent of a millennial client’s assets is lower than the probability that I manage 100 per cent of Gen Xers’ or baby boomers’ assets,” he says.
Ian Calvert, principal and vice-president, wealth planning, at Oakville, Ont.-based HighView Financial Group, says his company’s millennial clients often come through referrals from older family members already with the firm. Some millennial clients have had a bad experience with do-it-yourself investing and are seeking advice from a qualified professional.
He says members of this generation, in general, are also more active with their investments than older investors because they don’t have pension plans or rising home values to fall back on.
“They’re hungrier, more active and more inquisitive,” Mr. Calvert says.
Millennials are also more technologically savvy, which means advisors should be offering online tools they have come to expect to monitor their wealth.
“Millennials aren’t waiting at the mailbox for their monthly statement,” he says. “They want their wealth management experience to be digital and automated to really make things as smooth as possible.”
– Brenda Bouw, special to The Globe and Mail
Must-reads from Globe Advisor this week
Ever wonder if clients need marriage counselling?
How do you work with couples who are not on the same page financially? Advisors can be integral to mending romantic relationships despite financial incompatibility among couples. There are strategies to get to the root of problems that often don’t have to do with money. Kira Vermond takes a deep dive into why being a neutral person in the room while helping increase financial literacy can go a long way for couples.
Investors look to annuities for larger payouts
A combination of a flight to safety amid the pandemic, the possibility of higher payouts with rising interest rates, and more baby boomers retiring is expected to drive demand for annuities. Fixed-rate deferred products do especially well in a rising interest rate environment. Jameson Berkow speaks to advisors about whether they’re bringing up annuities earlier in planning with clients and where the demand is headed.
What’s happening to shares of vaccine makers?
It’s expected to be a good year for COVID-19 vaccine makers despite the recent slump, but don’t expect the shares to jump even as demand for boosters and treatments continues. These companies have a lot of potential with new developments in the works, but testing companies could see their products evolve significantly, experts say. Adam Mayers takes a closer look at the sector and the winners and losers.
How to beef up RRSPs for clients trying to catch up
Clients are thinking more about their future financial goals as inflation rises and pandemic worries start to ease a bit. Some middle-aged clients want to play catch up with retirement savings and advisors are considering strategies like taking a loan for contributions, using tax refunds and maxing out contributions on employer plans. Deanne Gage reports on how to make up for lost time with RRSPs depending on the client’s circumstances and risk tolerance.
What you and your clients need to know
How much safety and value are in Canadian financials?
The financial sector tends to do well in a rising interest rate environment, but how do they compare when you focus on their safety and value metrics? Sean Pugliese of Wickham Investment Counsel Inc. looks at Canadian-listed financial companies based on their market capitalization, dividend yield, debt-to-equity ratio, price-to-earnings and more to see which are the best bets.
Barriers and biases for women, other diverse groups persist
A recent survey goes beyond whether women and other diverse employees feel they belong and can succeed in Canada’s private capital industry. Female partners at venture capital firms were six times more likely than white, heterosexual, non-disabled men to report harassment in the workplace or feel their opinions were not heard or valued. Sean Silcoff reports on why it’s not enough just to recruit diverse people.
How can investors profit from inflation?
Is inflation very close to peaking? If so, what does this mean for investors? David Rosenberg of Rosenberg Research talks about how this scenario could translate to investors taking advantage of the recent yield back-up by adding duration to their bond portfolios based on the understanding that we’re now in the classic late-cycle “blow-off” phase.
– Compiled by Globe Advisor staff
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