Unlocking the Needs of Today's Affluent Investors, and Opportunities in Each Generation, for Advisors

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Dec 06, 2023, 08:00 ET

National Study Provides Insights for Financial Advisors on the Divergent Mindsets, Concerns, and Preferences of Affluent American Investors Across Generations

BERWYN, Pa., Dec. 6, 2023 /PRNewswire/ -- In an effort to unlock the intricacies of the affluent investor's mindset by generation, Envestnet, a leading provider of integrated technology, intelligent data, and wealth solutions, and The Center for Generational Kinetics today unveiled insights from their groundbreaking national study. This annual research delves into the generational nuances of affluent American investors, offering financial advisors actionable insights to foster trust, align business strategies, and ensure unparalleled service amid the headwinds of today's uncertain market landscape.

The goal of the study is to amplify understanding of the actions, behaviors, and trends defining the financial wellness and outlooks of affluent Americans, giving advisors a holistic view of personal financial perspectives and well-being across varied generations and affluence levels.

"Knowledge is power, and insight into how the needs and goals of affluent investors change as they age is key for helping advisors best serve clients and prospects over the long term," said Rich Aneser, Chief Strategy Officer at Envestnet. "Based on this national study's findings, advisors can utilize our platform and solutions to tailor the wealth management experience for clients of all ages, throughout each point in their financial journey."

Diminishing Sense of Financial Security
The study unearthed a precipitous decline in the sense of financial security among affluent Americans from 72% in 2022 to 59% in 2023. Turning to their future sense of financial security, 62% of affluent Americans expressed worry about their financial future in 2023, up from 46% in 2022. This decremental shift reflects intensified uncertainties, market volatilities, and shifting global dynamics which have occurred over the past year.

Generational & Affluent Divergences in Investment Approach
With 54% of affluent Americans growing skeptical about investing due to recent market fluctuations, the study shows a clear generational divergence in response to challenging market conditions. Older affluent generations are staying the course with their investments while becoming more cautious about spending, whereas their younger counterparts are diversifying investments and seeking additional financial knowledge. Another interesting finding concerns sensitivity to the impact of taxes: High-Net-Worth and Higher-Earning individuals view taxes as a significant factor when considering investment options, with 30% and 28% respectively identifying them as a major obstacle, compared to only 18% within the broader group of surveyed investors.

The Role of the Financial Advisor & Financial Planning
From an advice perspective, some generational differences have emerged, with affluent older generations predominantly seeking advice for life stages, wills, or trusts, while younger affluent generations more likely to consult professionals ahead of significant life changes, tax payments, large purchases, and loans. As might be expected, 79% of affluent Gen-Xers list retirement planning as their principal financial goal, while 33% of younger affluent investors prioritize building a business as their foremost financial aspiration.

Evolving Digital Engagement Preferences
The overwhelming preference for digital engagement, especially among affluent younger Millennials and Higher-Earners, is a testament to the changing landscape of client interaction and management in the financial advisory domain. About 79% of affluent younger Millennials review their total net worth monthly or more, and 66% of Higher-Earner Americans wish for technology to handle their finances. Understanding this digital proclivity emphasizes the necessity to integrate a balanced approach, amalgamating advanced technology with human insight, to meet the diversifying needs and preferences of the client base effectively.

Trust in Financial Professionals
The prominent reliance of affluent Americans on financial professionals for advice and planning activities indicates the profound influence and trust vested in advisors. This significant inclination towards financial advisors as trusted sources is not just a reflection of reliance but signifies the indispensable role that advisors play in shaping the financial trajectories of affluent individuals. Specifically, financial advisors came out as the No. 1 most trusted source of information about retirement planning, saving, and investing.

"The national study reveals that across affluent generations there is a strong desire for advice and help from financial advisors," said Jason Dorsey, President of The Center for Generational Kinetics. "In addition, financial advisors would be wise to continue to build their understanding, services, and approach to engage each generation of affluent in a way that best meets their current situation and financial goals. These findings are very exciting and reinforce that now is a great time to be a financial advisor who can serve multiple generations of clients."

"The above five core statistics are not mere numerical representations; they are profound insights reflecting the intricate dynamics, divergent behaviors, and evolving preferences of affluent investors. These insights can serve as beacons for financial advisors to forge deeper connections, craft personalized strategies, and reinforce trust, thereby navigating affluent investors through financial uncertainties with insightful counsel and support. As the macroeconomic conditions remain in flux, these insights provide a compass that ensures the alignment of advisory approaches with the multifaceted needs and evolving expectations of affluent clients, fostering enhanced financial well-being and resilience," concluded Mr. Aneser.

To read the complete "Unlock the Mindset of Today's Affluent Investor: Opportunities in Generational Challenges for Advisors" study, please visit this link, where you can learn more about the extensive results and insights from the 30-page white paper.

National Study Methodology:
The Affluent National Study included 1,500 U.S. participants ages 25–65. Two-thirds (1,000) of participants had an annual household income or household net worth of $100,000 or more. Two segments were oversampled. First, we added 250 participants in the Higher-Earner category. These individuals had an annual household income of $200,000 or more individually or $300,000 or more with a spouse/partner in each of the past two years. Second, another 250 participants in the High-Net-Worth category were also added. These individuals had a net worth of $1 million or more (excluding primary residence) individually or with a spouse/partner. The national study was weighted to the 2020 U.S. Census for age, region, gender, and ethnicity. Figures are statistically significant at the 95% confidence level and the margin of error is +/-2.53%. The national study was conducted online from March 29, 2023, to April 25, 2023.

About Envestnet

Envestnet is transforming the way financial advice is delivered through an ecosystem of technology, solutions, and intelligence. By establishing the connections between people's daily financial decisions and long-term financial goals, Envestnet empowers them to make better sense of their finances and live an Intelligent Financial Life™. With $5.4 trillion in platform assets—more than 107,000 advisors, 16 of the 20 largest U.S. banks, 48 of the 50 largest wealth management and brokerage firms, more than 500 of the largest RIAs, and thousands of companies, depend on Envestnet technology and services to help drive better outcomes for their businesses and for their clients.

Envestnet refers to the family of operating subsidiaries of the public holding company, Envestnet, Inc. (NYSE: ENV). For more information, please visit www.envestnet.com, and follow us on LinkedIn and X (@ENVintel).

About The Center for Generational Kinetics

The Center for Generational Kinetics, LLC (CGK) is the leading custom research and speaking firm focused on hidden generational change, must-know emerging trends, and behavioral insights. We have led more than 100 custom research studies for clients around the world. CGK's team has worked with over 700 organizations, from the most innovative technology companies to financial services, banks, retailers, hospitality, and private equity. The firm's latest bestselling book is Zconomy: How Gen Z Will Change the Future of Business. Learn more about CGK's pioneering research, including their team's 200+ TV appearances, at GenHQ.com.

SOURCE Envestnet