As Millennials become more established in their careers, they are generally not on the radar of most financial advisors, reveals new research from the Principal Financial Group. According to The Principal Financial Well-Being Index: Advisors, a nationwide study of 614 financial advisors conducted online by Harris Poll for the Principal Financial Group in the second quarter of 2014, only 18 percent of financial advisors surveyed are targeting clients in Generation Y, and 57 percent of advisors prefer new clients with assets of more than $250,000.
The Principal Financial Well-Being Index: Advisors surveyed financial advisors nationwide including independent broker/dealers, wire house and regional brokerage firms, insurance agencies, independent wealth management firms, banks and independent asset management firms. The Index is part of a series of quarterly studies commissioned by The Principal Knowledge Center examining the financial well-being of American workers, business owners and advisor opinions and practice management.
According to the Index, at least three out of five financial advisors surveyed are targeting Baby Boomers (64 percent), affluent/high net worth individuals (64 percent), or business owners (62 percent). In fact, only 30 percent of American workers overall work with a financial advisor.
“This research illustrates the enormous opportunity for up-and-coming advisors to build relationships with underserved Millennials, who are in a growing phase of their careers and income potential,” said Tim Minard, Senior Vice President of Distribution at The Principal.
So what prevents Millennials and other workers from seeking the help of a financial advisor? The study found that 29 percent of advisors surveyed report that fees and costs are the biggest barrier, followed by fear (16 percent) and people thinking they can do it on their own (10 percent).
Many of these financial advisors reported that clients tend to live beyond their means (22 percent), don’t save enough (15 percent) and do not start to save early enough in their careers (11 percent). The majority of advisors (52 percent) indicate that no more than one in four of their clients begin saving early enough in their career to actually achieve the recommended level of retirement savings.
“One of the biggest challenges advisors face is helping clients try to catch up when they didn’t start saving for retirement in the early years of their careers,” Minard said. Financial professionals are able to easily demonstrate to clients the power of early savings and the impact it has on their retirement nest egg.”