The study found that while these individuals share many of the same financial goals as RIAs’ current clients, they have defining characteristics related to their outlook on life and finances:
- They are anxious: Having lived most of their lives through one of the longest recessions this country has ever experienced, they have been impacted in ways as much psychological as financial. The instability of housing and dot-com bubbles, terrorist attacks, rising unemployment and geopolitical clashes dominated the early part of their lives creating a pervasive sense of insecurity about the future and a shaken belief in the long term. Certain that the next crash or crisis will occur, they worry about being able to provide for their families.
- They approach investing and advice with distrust: Their fear and insecurity, combined with distrust of financial institutions and professionals, keep them focused on short term versus longer-term needs. Their cash savings rates are high and even those with $4-5 million in investable assets worry about budgeting and spending levels. Cash represents a tangible safety net they can trust. When it comes to their perceptions of financial services professionals, many cannot differentiate between types of financial advisors, and they distrust the profession generally. They think that advisors don’t understand them. Further, they question advisors’ ability to deliver unique insights and expertise, feeling often that they recite corporate talking points.
- They dream of financial freedom: Success for this generation is having the freedom to avoid hardship and to not be a burden to others. They want to live free from worry about the unexpected, and every now and then, to be spontaneous. This group is facing a longer retirement than any generation before them and needs to plan for this reality. Accordingly, they have reframed their perceptions of what success looks like. Success means having enough to cover healthcare, education, housing and elder care costs – and protecting against the unknown. When asked about what they would do once they had financial freedom, almost all who participated in the study said travel. This desire for life experiences trumps flashy lifestyles and material goods.
When considering their ideal relationship with a financial advisor, Generation Now Study participants indicated they are seeking:
- Custom Relationship: They are looking for an advisor who can build a trusted and transparent relationship, based on empathy and understanding of the whole person, not just their financial goals.
- Collaboration: Generation Now is often juggling a myriad of complex and sometimes competing financial needs and concerns. They want their advisor to provide planning and financial advice alongside expert advice in other related areas, such as tax or insurance. Generation Now also has a strong research bias and will expect to be heavily involved in decisions about their investment strategy.
- Accessibility: Generation Now, having grown up in a 24/7, on-demand world, has a desire to communicate with advisors when and how they want with access when they need it. This means a combination of in-person meetings as well as voice, text, email and videoconferencing.
About the Charles Schwab Generation Now Study for RIAsCharles Schwab Generation Now Study for RIAs was conducted for Schwab Advisor Services™ by Egg Strategy, a strategic research firm. The study, which was released in 2014, included 40 participants, men and women ages 30-45 with earned or inherited investable assets of $500K (excluding real estate and business holdings), or a house-hold income of at least $150,000. The term Generation Now reflects the immediate opportunity that this incoming cohort of high-net-worth investors may represent for RIAs. All data was self-reported by participants and not validated or verified. Egg Strategy is not affiliated with nor employed by Charles Schwab & Co., Inc. Investors participated in this study between March, 24 2014 and April, 11, 2014. An executive summary of the Charles Schwab Generation Now Study for RIAs is available at: www.aboutschwab.com/press/research/advisor_research. About the Independent Advisor Outlook Study (IAOS) The current Independent Advisor Outlook Study reflects the opinions of 720 independent advisors representing an estimated $180 billion in assets under management. The current wave set out to better understand advisors’ perspectives about the opportunities and challenges they see with respect to the next generation of clients, including the ways in which they are planning to augment their strategies for business growth and their client service models. The results of the study have been released in a separate news release and detailed findings can be found at www.aboutschwab.com/press/research/advisor_research. The IAOS, conducted for Schwab Advisor Services by Koski Research, has a 3.65% margin of error. Koski Research is not affiliated with nor employed by Charles Schwab & Co. Inc. All data are self-reported by study participants and are not verified or validated. Advisors participated in the study between April 15 and May 6, 2014. About Schwab At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.