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Younger Investors Back Off Advisors
Advisors take note, when it comes to trust, fees and decision-making, young investors are wary.
A new Cogent Report reveals fewer than 6 in 10 investors of Generation X (57%) and Y (59%) feel that their financial advisor is working in their best interest. These ratings are in stark contrast to relatively older investors who report much higher levels of trust likely due to longer working relationships and more focused attention from their advisors.
Not surprisingly, these younger investors also allocate the lowest proportion of their assets to a primary advisor, highlighting an opportunity for financial providers to bolster current advised relationships and potentially capture greater wallet share.
In addition, advised Gen Y investors are the most likely across all age cohorts to agree that they actively research and validate investment recommendations from their financial advisors before investing (53% vs. 35% of all advised investors). This relatively higher level of engagement likely stems in part from low confidence in current advised relationships as well as the fact that these younger investors appear to be very focused on growing their assets to accomplish both near-term and long-term goals. Meanwhile, Silent Generation investors (58%) are the most likely to delegate investment decision-making, given their life stage in retirement and trust in current advisors.
Lastly, only 56% of advised investors strongly agree that they have a good grasp on the fees that they pay their primary advisor. While Silent Generation (61%) and 1st Wave Boomer (60%) investors are the most likely to agree among the age cohorts, these proportions highlight that there is a fair amount of advised investors who do not have a handle on what they pay advisors for advice and reveals another potential source of investor distrust.
» For more information, read our white paper to understand the emerging opportunity of Generation Y