Gen Y Good Targets For Advisors

Financial advisors have ample opportunity to attract investors from the Gen Y generation -- those between 18 and 30 years old -- if they know how the age group thinks, says a new survey by MFS Investment Management, a global money management firm.

Gen Y investors, those born between the early 1980s to the mid 1990s, are more conservative than baby boomers. But those questioned in the MFS survey feel more confident in their investing knowledge and yet 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 an advisor played a key role. The second-highest group was Gen Xers, where 76% said an advisor played a key role in their review.

"It is a demographic imperative that the financial services industry embraces younger investors," says William Finnegan, 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. "Changing how they engage younger generations and helping them transition from conservative savers to long-term investors might just be the ultimate challenge for today's financial advisors."

Gen Y feels more confident in their investing than their baby boomer parents or grandparents with 39% (compared to 28% of baby boomers) saying there are very knowledgeable or expert investors. And a majority (64%) is confident about the economy and 78% are confident about their own future for the next five years.

But 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 savers more than investors.

Gen Y offers financial advisors the next large wave of investors, with 77 million Americans fitting the definition with $1 trillion in spending power and many years to invest.