RIAs Tell TD Ameritrade That 41% of Incoming Clients Will Be Gen X and Millennials by 2023
May 09 2018 - 07:30AM
Business Wire
To Meet Next Gen Demand, RIAs Say Changes in
Marketing, Networking Are Critical
Baby boomer assets are the current wealth management sweet
spot1, but a growing segment of independent registered investment
advisors (RIAs) recognizes that embedding Gen-Xers and millennials
as long-term clients requires a shift in business strategy now.
According to new findings from the TD Ameritrade Institutional2
2018 RIA Sentiment Survey, 42 percent of RIAs say they are working
on changing their marketing and networking to attract younger
clients.
RIAs say that in five years from now, the demographic
composition of their clients will start to change dramatically.
Baby boomers, who today make up 46% of RIA clients on average, are
expected to drop slightly to an average of 43% of clients. Gen Xers
and millennials are expected to jump up significantly, averaging
27% and 14% of all clients, respectively, up from just 21% and 9%
today. Seniors are expected to fall from 23% to 14% of clients.
"In just five years, RIAs expect 41% of their clients to be Gen
Xers or millennials. This should be a wake up call to those who
think that Next Gen wealth is literally still a generation away,"
said Kate Healy, managing director, Generation Next, TD Ameritrade
Institutional. "Change is coming, which means advisors need to
rethink their approach to finding both talent and clients in order
to continue on their growth trajectory."
RIAs say wealth transfer to non-clients remains one of the
biggest threats to growth, so future-thinking advisors are using a
variety of tactics to attract Next Gen clients. Nearly 40 percent
are advising 401k plan participants. Forty-seven percent are
re-evaluating how they charge for services, whether that means
introducing flat fees for financial planning and coaching (33%) or
adjusting pricing and fees in some other way (14%). Recognizing
that this demographic tends to be in the early stages of wealth
accumulation, more than 20 percent of RIAs are lowering asset
minimums.
Hiring practices also reflect a greater Next Gen focus. Thirty
percent of RIAs are hiring younger advisors, and 24 percent are
hiring college interns. One in five plan to hire and train
mid-career changers, providing an opportunity for women re-entering
to the workforce and professionals from other industries or the
military.
Still, the pivot to Next Gen is not without its challenges, and
some RIAs surveyed are grappling with how to best manage the
expected pipeline of younger money. A quarter called out either
succession planning or hiring talent as the challenge with the
greatest potential impact on their firms this year. And 22 percent
named the shortage of young advisors as a threat to growth.
Not all advisors express an urgent need to jump on Next Gen
planning. Forty-four percent of those surveyed are not taking any
steps to build a new talent pipeline. Roughly a quarter (23%) are
not doing anything to attract younger clients. According to Kate
Healy, RIAs ignoring demographic shifts do so at their own
peril.
“Advisors who are not planning now to ensure the longevity of
their firms risk being left behind,” said Healy. "Firms that are
actively taking steps now to manage for client needs down the road
may be better prepared in terms of talent, technology and of
course, clients."
About the SurveyThe TD Ameritrade Institutional 2018 RIA
Sentiment Survey was developed to understand the views of RIAs on
the economy, as well as their outlook for their firms and the RIA
industry. Results are based on a telephone survey conducted by
MaritzCX, on behalf of TD Ameritrade Institutional, a division of
TD Ameritrade, Inc., from November 27 through December 7, 2017. The
survey included 300 RIA participants handling, on average, $161
million in client assets. The margin of error is +/- 5.6%.
TD Ameritrade Institutional and MaritzCX are separate and
unaffiliated and not responsible for each other’s services or
policies.
About TD Ameritrade InstitutionalTD Ameritrade
Institutional is a leading provider of comprehensive brokerage and
custody services to more than 6,000 fee-based, independent RIAs and
their clients. Our advanced technology platform, coupled with
personal support from our dedicated service teams, allows
investment advisors to run their practices more efficiently and
effectively while optimizing time with clients. TD Ameritrade
Institutional is a division of TD Ameritrade, Inc., a brokerage
subsidiary of TD Ameritrade Holding Corporation.
About TD Ameritrade Holding CorporationTD Ameritrade
provides investing services and education to more than 11 million
client accounts totaling more than $1.2 trillion in assets, and
custodial services to more than 6,000 registered investment
advisors. We are a leader in U.S. retail trading, executing more
than 940,000 trades per day for our clients, nearly a quarter of
which come from mobile devices. We have a proud history of
innovation, dating back to our start in 1975, and today our team of
10,000-strong is committed to carrying it forward. Together, we are
leveraging the latest in cutting edge technologies and one-on-one
client care to transform lives, and investing, for the better.
Learn more by visiting TD Ameritrade’s newsroom at www.amtd.com, or
read our stories at Fresh Accounts.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
/ SIPC
1 Cerulli Associates, The Cerulli Report: U.S. Advisor Metrics
20172 TD Ameritrade Institutional is a division of TD
Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation.
Source: TD Ameritrade Holding Corporation
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180509005177/en/
TD Ameritrade InstitutionalJoseph Giannone,
201-369-8705Communications + Public
Affairsjoseph.giannone@tdameritrade.com
TD Ameritrade (NASDAQ:AMTD)
Historical Stock Chart
From Feb 2024 to Mar 2024
TD Ameritrade (NASDAQ:AMTD)
Historical Stock Chart
From Mar 2023 to Mar 2024