When it comes to staying in touch with younger investors, face-to-face or phone contact trumps social media outlets like Facebook, Twitter or LinkedIn.
That, according to a new survey from Merrill Lynch Private Banking & Investment Group, is just one of the findings that financial advisors need to keep in mind when looking to attract and keep clients in their 20s and 30s. Titled Young High Net Worth Insights, the survey reached out to 153 investors between 18 and 35 with more than $1 million in investable assets.
And the results from the February survey, like the preference for direct communication, show that younger generations are taking cues from their parents when it comes to how to approach investing.
Of the respondents, 69% said they believe their parents approached investing the right way versus 31% who said their parents did not; 65% of respondents said they invest in ways similar to their parents versus 35% who said they do not; and 65% said they think their parents investment approach still works today versus 35% who said it does not.
But younger investors also said that they are lacking the financial knowledge that their parents have. Just 45% said they have more investment knowledge than their parents, while 33% said they know less about investing than their parents and 22% said they are about equal. And while 56% said they are moderately knowledgeable about investing, 25% said they have very little knowledge and just 19% said they are very knowledgeable.
When it comes to accessing information on financial investments, most young investors turn to traditional media, including general television news, with 67% of respondents; business television news, 58%; national newspapers, 55%; and magazines, 52%. By contrast, just 27% of respondents said they look to social media or blogs to stay well informed.
The key piece here is younger investors dont know it all, theyre not looking to social media to get all the answers, said Michael Liersch, director of behavioral finance at Merrill Lynch Wealth Management. In fact, theyre really looking to parents and advisors to offer advice and guidance and they really want it.
The fact that younger investors often approach Liersch for his business card after family meetings is a sentiment that was captured in the survey results, he said. The younger generation wants to know more about how to invest, but they want specific advice for their situation and they want to receive that advice privately. And, the fact that they feel less knowledgeable than their parents often prevents them from speaking up during family meetings.
They need the advisor or whoever it is to really empathize with them, to speak their language and to come at them with this notion that they may not know everything, Liersch said.
The results reaffirm the actions taken by Merrill Lynchs Private Banking & Investment Group, which caters to the ultra affluent set, to make sure that the business is properly embracing clients from younger generations, said Phil Sieg, head of the ultra high net worth client segment and solutions at Merrill Lynch.
The efforts include financial boot camps, where young investors can get a financial education alongside their peers, a next generation advisory board that solicits feedback on the services younger investors are interested in, and a set of leaders who can help advisors conduct family meetings to address issues including family dynamics, mission statements and legacy planning.
It made a significant impact on our ability to understand and work with the next generation, but also frankly has made the parents who are clients very appreciative, Sieg said.
Advisors looking to reach those younger clients still have plenty of opportunity, the survey results showed. Of the respondents, 59% said they are now working with a wealth advisor, while 72% described themselves as self-directed investors. At the same time, 49% of respondents said they would consider working with their parents financial advisor versus 24% who said they were opposed to that kind of relationship.
But professionals looking to solicit these younger clients ought to bear their top concerns in mind. When it comes to working with an advisor, 39% said they want a professional who understands their needs at their life stage, 33% said they want someone who can communicate with their generation, 29% want values-based investing options, 26% want products and services that are not available elsewhere; 23% want resources to help fund their businesses and 15% want help managing philanthropic endeavors.