With ongoing digital disruption and a looming trillions-dollar wealth transfer, should firms position their offerings to cater to baby boomers or millennials?

On one hand, firms have been in a race to cater to tech-savvy, up-and-coming millennials, who represent the next generation to come into wealth. Surveys show this generation, ages from approximately 22 to 37, still remain largely unattached to traditional financial services firms, and represent a large opportunity for both new upstarts, including fintech firms and robos, and traditional advisory firms, alike. Roughly 85% of millennials say they have a conservative risk tolerance.

The debate will be front and center at the upcoming In|Vest conference in New York City, where executives from John Hancock Personal Financial Services, United Capital and TIAA, among others, will offer insights on the optimal strategy moving forward.

“So, boomers both are, and they are definitely not, the new millennials,” says Matt Fellowes, CEO of United Income, who will take part in the panel discussion. “They are obviously not because of one major difference: Boomers have money and millennials don’t.”

According to Fellowes, heads of households that are 50 years old and older own some 80% of investable assets. However, a growing industry focus on boomers is reminiscent of the recent craze to cater to millennial clients, he says. “We are living a lot longer and that wealth concentration will be maintained for at least the next few decades to come,” Fellowes says. “So, it pays to pay attention to this population.”

A PwC survey found few millennials seek professional financial advice.


As for the upcoming wealth transfer, much of those assets will likely stay in investable accounts, Fellowes says. “People who inherit that wealth will be a lot older than previously, meaning recipients could be 70 years old. Older clients have much fewer spending needs, so wealth can stay in investment accounts rather than flying out the door in the form of commerce.”

While spending needs drop off for older clients, spending volatility often increases. “Financial lives can often become more complicated as we age,” Fellowes says. “Spending shock, like car accidents and health costs, and positive spending shocks, like the arrival of grandchildren and education expenses, means spending needs get very lumpy.”

Boomers have the most wealth, but younger generations have more staying power, says Matt Brinker, head of acquisitions at United Capital. “The vast concentration of the wealth management industry itself is comprised of baby boomers. But, if we’re not backfilling these clients that are predominantly in distribution, how are we expected to grow?” Brinker says.

Brinker is heading a session called, “The Makings of a True Destination RIA,” on July 11. Since its inception in 2015, more than 2,000 executives have attended the In|Vest conference, which is organized by SourceMedia, Financial Planning’s parent company. Roughly 25% of attendees are from digital wealth management firms.


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“I love the ability to sit in and listen and learn from folks that have a different perspective,” Brinker says about the conference. “Hopefully folks can be candid and direct with how they’re seeing the challenges facing the industry, and what we can do to make sure we’re delivering enough value for the fees that we charge clients.”

Without meaningful collaboration between independent advisors, the channel could experience significant disruption, he warns.

“The opposing forces in our industry — the wires, the banks and the largest firms that have an incredible amount of scale and advertising power — are a real threat,” Brinker says. “Any fragmenting in the RIA channel makes it is really hard to complete.”

“If RIAs don’t keep up in the technological arms race, it’s going to get harder to differentiate ourselves,” he says. “Our story to wirehouse advisors used to be independence, open architecture, lower fees, etc. Wirehouse advisors can now effectively say the same things. So, how are we telling a different story?"

Sean Allocca

Sean Allocca is an associate editor of Financial Planning, On Wall Street and Bank Investment Consultant.