Cerulli Finds Just 19% of Investors Use Their Parents’ Advisor
November 14, 2023 — Boston
An opportunity exists for advisors to focus on kindling intergenerational relationships
Just one in five affluent investors use the same advisor as their parents, according to the latest Cerulli Edge—U.S. Retail Investor Edition. Advisors must reinforce the value of their services to clients both early in the relationship and in times of unique difficulty to strengthen and retain relationships for the long term.
Maintaining a relationship across generational divides is a ‘win-win’ for both investors and the advisory firm itself—young investors receive the benefits of an advisor who already is familiar with the family’s financial situation, and the advisor has a chance to preserve the account for the next generation.
Despite the benefits, Cerulli’s research shows more than 90% of affluent investors who use their own advisor did not consider their parents’ advisor in their selection process, and just 6% gave their parents’ advisor even the slightest consideration. The increasingly mobile nature of the younger demographic means they are more likely to switch advisors, unless the firm itself really gets to know them and their financial needs.
“While they may begin as a sort of ‘marriage of convenience,’ advisors can create long-lasting relationships with their clients’ children,” says research analyst John McKenna. “Advisors whose clients have financially interested children should work with them—either helping them with their own financial plans or directing someone else within the firm whose life experiences align with these clients to join the advising team,” he adds. For parents, having family-level conversations can smooth out potential future trouble spots in terms of inheritance or financial support, should misfortune befall either generation.
“More than ever, involvement in financial discussions for wealth planning is becoming a ‘need to have’ rather than a ‘nice to have,’ and with an increasingly affluent Millennial demographic, advisors cannot afford to squander such business-expanding opportunities,” concludes McKenna.
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