Gen Y Good Target For Advisors
Financial advisors have ample opportunity to attract investors from the Gen Y generation if they know how the age group thinks, according to a new survey of Gen Yers by MFS Investment Management, a global money management firm.
Gen Y investors, those born between the early 1980s and the mid-1990s, are more conservative than baby boomers. According to the MFS survey, these younger Americans feel more confident about their investing knowledge. At the same time, they use financial advisors more than any other age group.
The survey included 974 individuals with at least $100,000 in household investable assets. The results showed Gen Y is more amenable to talking with advisors than other generations. Of those who rebalanced or reviewed their investments in the last 12 months, 89% reported that an advisor played a key role. The second highest percentage was among Gen Xers, at 76%.
"It is a demographic imperative that the financial services industry embraces younger investors," says William Finnegan, a senior managing director of U.S. retail marketing for MFS. "We've identified challenges and opportunities for Gen Y investors that financial advisors are uniquely qualified to address.
"However, the advisors are operating in a business model geared toward serving older generations," he adds. Advisors' ultimate challenge, he says, is to change the way they engage younger generations and help Gen Yers turn from conservative savers into long-term investors.
Gen Yers feel more confident about their own investing than their baby boomer parents or grandparents: 39% said they are very knowledgeable or that they are expert investors, while only 28% of baby boomers said the same. And a majority of the Gen Y population (64%) is confident about the economy; 78% are confident about their own future for the next five years.
Yet, at the same time, 54% say they are more concerned than ever about being able to retire, despite the long-range time horizon they are looking at, and 44% say they have lowered their expectations about the quality of their life in retirement.
A large group of the Gen Y generation (40%) does not feel comfortable investing, and 54% say they feel overwhelmed by investment choices. A majority (59%) consider themselves to be savers more than investors.
Some 77 million Americans fit the description of a Gen Yer. This group has $1 trillion in spending power and many years to invest. They are the next large wave of investors, and that's an opportunity for financial advisors.
-Karen DeMasters
Jackson National Tops In VA Loyalty
On the one hand, annuities still get a bad rap among some financial advisors for their fee structure and complexity. On the other hand, they're increasingly seen as an income-generating substitute for the fading institution that is pension plans. For advisors who use annuities--specifically, variable annuities--some providers rate higher than others. According to a Cogent Research survey of 1,643 retail investment advisors across all major distribution channels, Jackson National Life Insurance now ranks first among variable annuity providers in advisor loyalty.
Jackson replaced Prudential for top position, one year after Prudential displaced Jackson for the top spot. Prudential is back in second, but both firms improved their overall loyalty scores as reported in the 2011 "Advisor Brandscape" report from Cogent, a Boston-based consultancy.