Advisors "anticipating the greatest wealth transfer in U.S. history" — from boomers to their children — might find some insights into what makes the younger generations tick in a new study from Global X Management Co. LLC.
New York City-based Global X, which has created a series of exchange-traded funds aimed at "capitaliz[ing] on broad changes in demographics and consumer behavior," is no stranger to exploring the differences among generations with regard to investing.
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In commissioning the study "Beyond Baby Boomers: The Investable Assets of Tomorrow" from ORC International, the company has gone a step further. The study takes a look at how Gen X and millennial investors differ in attitudes and behavior when it comes to investing.
Respondents had to have a minimum level of $100,000 in investable assets to qualify for the survey, and the differences among them — by generation and by group — were quite noticeable.
The report divides Gen Xers (ages 37-48) and millennials (ages 21-36) into four groups:
- Builders: A millennial group with an approximate market size of $270 billion.
- Adrenaline techies: A millennial group with an approximate market size of $980 billion.
- Cautious consulters: A Gen X group with an approximate market size of $1.5 trillion.
- Knowledgeable Xs: A Gen X group with an approximate market size of $5.4 trillion.
Among those four, the cautious consulters stand out as being 38 percent more likely to save for retirement. That group, the study found, is the most likely to use brokers or advisors and does not like to trade often.
Instead, they're "saving for retirement much more than investing for pleasure or short-term purchases" and "have a low knowledge of and comfort level with specific investment types."
While advisors will need to be on their game in other areas for the other three groups — for the builders, providing low fees and educating them on finance; for the adrenaline techies, having to compete with robo-advisors while needing to be savvy on apps and web- and podcasts; for the knowledgeable Xs, having to compete on fees, transparency and tax efficiency — the study said advisors can earn the trust of the cautious consulters by providing financial education.
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