Which profile fits a money manager’s ideal customer – a “Mass affluent” 50-year old or a dead broke 20-something? The wealth management industry would do well to run the numbers, because it is the latter that will generate a larger fee stream over time.
How can that be? The short answer is that millennials will live longer, require far more in retirement savings, and use more high margin investment products for longer than their parents’ generation.
This simple calculus seems beyond the reach of an industry that still commonly features high minimum balances for advisory services and does little in the way of outreach to younger customers. So called “Robo-advisors” have begun to gather up this group of younger investors, but there is still plenty of time for the traditional money management industry to service this next, much larger, wave of customers.