While overall investor satisfaction with financial advisors is up, more affluent Millennials are reconsidering the firms they do business with.
The new J.D. Power 2024 U.S. Full-Service Investor Satisfaction Study finds that as investor satisfaction rises eight points year-over-year, 36% of Millennial investors with over $1 million in assets say they “probably will” or “definitely will” move firms within the next year.
Millennials are a rising rank among affluent clients, as the age cohort will soon be considered “the richest generation in history,” according to a report last month from global real estate consultancy agency Knight Frank. The report found that Millennials will inherit $90 trillion over the next 20 years, as the Silent Generation and Baby Boomers “hand over the reins” to the group.
The hefty inheritance presents an opportunity for advisors and wealth managers, and one they should be careful not to lose, says J.D. Power.
“It is conventional wisdom that investor satisfaction tracks closely with stock market performance, but for advisors who want to build long-term, sustainable relationships that can weather good markets and bad, they will need to build a deeper level of engagement with clients,” said Craig Martin, executive managing director and global head of wealth and lending intelligence at J.D. Power, in a statement. “This is especially true among the younger segment of investors who show lower levels of client loyalty than investors in other generational groups. Advisors will need to adjust their approach to meaningfully connect with younger investors or risk a major outflow of assets in coming years.”
According to J.D. Power’s report, a potential factor in the lack of loyalty from affluent Millennials could stem from the fact that 70% already have a secondary investment firm. This number is significantly lower among older affluent cohorts, states the report.
Financial professionals looking to retain their clients should ensure they’re embracing technology while differentiating themselves from artificial intelligence (AI) solutions. In 2024, 41% of advised clients’ experiences fell into the transactional category on the J.D. Power advice continuum.
“This group is put at the greatest risk by technology-enabled solutions that can effectively compete on price and efficiency,” the report states. “Delivering truly personalized guidance that addresses a client’s unique goals and challenges, major life changes and investment strategies that transcend returns are keys to insulating the business from future competitive threats.”
The 2024 study is based on responses from 9,951 investors who work directly with a dedicated financial advisor or team of advisors. Of the highest rankings, U.S. Bank placed highest with overall investor satisfaction score of 761. Edwards Jones ranked second at 749, while Vanguard closed in third place at 748. The study was fielded from January 2023 through January 2024.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
