Good News Advisors: Young Prospects Want to Hire You
The advisory/wealth management has long fretted about its future as it relates to younger prospects and clients and those concerns seem to grow with each new tech-heavy, social media-driven investment innovation. The ball that got rolling with roboadvisors created perceived empowerment and contributed to multiple generations where it do-it-yourself (DIY) investing appears to be “cool.”
While DIY is often viewed as a threat to advisors and the primary reason why their client rosters aren’t larger, they can find solace in a few important. Those include data and studies confirming that advised clients are usually more confident and positive regarding their long-term financial outlooks than unadvised counterparts. And it certainly shouldn’t be overlooked that advised clients typically garner better returns than those not working with fiduciaries.
It appears more young investors are waking up to these facts because J.D. Power’s 2025 U.S. Investor Satisfaction Study indicates younger, DIY market participants want the human touch. That’s good news for an industry that some experts see as too dependent on baby boomers and not doing enough to woo more youthful clients.
Young Investors’ Advisor Demand Is Imminent
The J.D. Power study isn’t the first to suggest millennials and Gen Z want to work with advisors, but it does highlight the imminence of that desire, implying advisors need to be proactive not reactive.
“More than one-fourth (27%) of current DIY investors say they are likely to use a financial advisor in the next 12 months,” according to the study. “The percentage of DIY investors seeking advisory relationships is highest among members of Gen Y and Gen Z (37%), and lowest among those in the Gen X, Boomer and Pre-Boomer generations (21%).”
Kapil Vora, senior director of wealth intelligence at J.D. Power, makes a point advisors should heed. The above percentages pertaining to young investors are likely to be higher today because the survey was conducted over the course of 2024, but the current market climate is markedly different and potentially contributing to increased willingness among Gen Z and millennials to work with advisors.
Encouraging signs to be sure, but the industry isn’t doing enough to decrease the average age of clients. The focus remains on older clients and prospects, likely because it’s believe they have the money.
“While interest in advisory services is high among younger investors, traditional wealth management firms are disproportionately skewed toward older investors,” observes J.D. Power. “The percentage of investors younger than age 40 is just 11% at traditional wealth management firms vs. 20% at retirement/discount brokerage firms; 26% at banks; and 42% at fintech firms.”
Heed Clues from Younger Investors
Understanding motivations, regardless of a prospect’s age, is always important and that’s certainly true with young people. When it comes to why they haven’t yet made the leap to working with an advisor, 41% told J.D. Power they don’t feel intimidated managing their own money and the same percentage said they simply enjoy doing it. Ease of doing business is also critical.
“When it comes to the individual dimensions that drive investor satisfaction with wealth management firms, ease of doing business is one of the most critical criteria and ranks just below trust; products and services; and people as the foundation for a positive investor experience,” according to the study.
Advisors might be able to find some clues about younger investors by looking at the asset managers these demographics rank the highest. Those are Vanguard, Fidelity and T. Rowe Price.