24 Feb Why Next-Gen Wealth Creators Should Seek Financial Advice
Next-gen wealth creators (Gen X and Y), many in the technology industry, are opting for more self-directed financial advice than previous generations did.
A recent survey done by Spectrem Group, the Chicago based research firm that focuses on the affluent and retirement markets, found that millionaires ages 45 and less were not as interested in seeking the advice of financial advisors, and felt it was too expensive; the younger the age (especially the group under 35) the stronger the belief.
While this is concerning for the investment business as a whole, I believe it’s equally as dangerous for the next-gen wealth creators and here’s why:
- Young millionaires have limited experience. — Access to information via the internet is not the same thing as knowledge and wisdom. The abundance of data can shorten the learning cycle but experience and perspective accumulates over time like many other things.
- Young millionaires have limited attention. — Multi-tasking of diverse interests and job responsibilities can leave little time for thoughtful planning and management of wealth. Just like hitting the gym, the outcome can be directly correlated to the effort and time expended.
- Young millionaires are cocky — yes, I said it. Taking bigger than normal risks with their new found money under the false impression they can build it back again if they miss the target, or worse yet, lose it all. Not understanding how rare it is to achieve the financial windfall they have and how much luck is involved in the outcome. (Don’t be self-righteous enough to think you were the first generation to make this mistake.)
The financial advice industry is not absolved, and in fact, has contributed to the shying away of the younger generations. We have been slow to embrace change and not adapted services and our approach to the new world. We have relied too heavily on our own past successes and judged young millionaires by saying they just don’t get it. The next-gen wealth creators clearly want the old dog to learn some new tricks.
Look out for my next post that will provide a check list for young millionaires to spot advisory solutions that could fit the needs of today.