Surveys

Emerging Millionaires: An Opportunity For Advisors - But Expect A Change In Demographics - Survey

Eliane Chavagnon, Editor - Family Wealth Report, January 17, 2014

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An alarming 77 per cent of those on the cusp of entering millionaire territory don’t have a written financial plan, while a similar percentage aren’t confident in their ability to invest, a new study shows.

An alarming 77 per cent of those on the cusp of entering millionaire status don’t have a written financial plan, while a similar percentage aren’t confident in their ability to invest, a new Fidelity Investments survey has revealed.

The study - part of Fidelity’s Insights on Advice series – involved individuals with an average of $800,000 in total assets and an annual household income of $150,000.

It found that, unlike today’s millionaires who are more likely to be male and mostly on the Baby Boomer end of the age spectrum, nearly half of the millionaires of tomorrow are women (49 per cent) and Gen X/Y (49 per cent).

“These investors represent significant demographic shifts that may impact the make-up of financial advisors’ client base, with female and Gen X/Y investors expected to amass $22 trillion and $41 trillion in assets by 2023 respectively,” Fidelity said.

Meanwhile, the study identified three significant behavioral trends that the firm believes may be holding the “millionaires of tomorrow” back from hitting the million-dollar mark:

1. Playing it too safe when it comes to investing: While they are seemingly on top of “financial basics” like debt and household expenses, they’re not comfortable taking on risk to maximize returns.

2. Not having a plan to meet their long-term financial objectives: This cohort, Fidelity said, is highly focused on the long-term – yet they do not have a plan to help get them there.

3. Not using financial advisors: Despite a lack in confidence as regards investing, the millionaires of tomorrow are not turning to financial advisors for help.

“The challenge for advisors will be to prove their value – and the value of taking on risk – to a group that is somewhat unsure of professional advice,” said Bob Oros, executive vice president, Fidelity Institutional Wealth Services.

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