Young Investors Not Choosing Parents’ Advisors

When it comes time to choose a primary financial advisor, young investors tend to look beyond the full-service brokers favored by their parents and grandparents.

Those who are 50 or younger are more likely to use an investment advisor (19%) than a full-service broker (17%) as a primary advisor. Other popular choices: independent financial planner (16%), independent investment manager (9%) and accountant (5%). All other affluent investors, however, turn first to a full-service broker, with the preference for brokers as primary advisors increasing with each succeeding age group. Some 21% of affluent investors who are 51 to 64 years old choose a full-service broker as their primary advisor, and that percentage increases to 37% of 65- to 74-year-olds and 40% of those who are 75 or older.

Affluent investors of all ages, but particularly the young, have re-evaluated their primary advisors in recent years amid growing interest in holistic advice and a loss of confidence in full-service brokers. In the past, full-service brokers focused solely on their clients’ investable assets, but that left them out of step with affluent investors who have become interested in all aspects of their financial lives. Not finding what they need in full-service brokers, these individuals have begun gravitating to those professionals who can provide holistic advice.

Meanwhile, full-service brokers faced a crisis of confidence in the aftermath of media reports of conflicts of interest and other ethical lapses in the financial services industry. More than one-third (38%) of affluent investors say they no longer believe full-service brokers are acting in their best interests.

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