Unobstructed Thoughts

How Millennials Will Reshape Wealth Management


Every generation of affluent consumers makes their mark in reshaping the wealth management industry.  The newest generation of up-and-coming investors, millennials, will cause a paradigm shift in the development and delivery of services and products to meet their unique set of needs.  Are you and your firm prepared?

Change often happens quietly behind the scenes, without us even realizing it.  We go about our daily lives, and then suddenly, out of nowhere, realize that the things around us have changed and continue to change very rapidly.  Some might argue that these are just passing trends, but they are also a sign of a more profound change occurring.  In today’s world where everything seems so instantaneous, digitized and brief, people are yearning for things, ideas and causes they can care about and cherish.

This is especially true of millennials.  According to a recent report by the Brookings Institution, 84% of millennials consider a company’s involvement in social causes when making purchasing decisions; 63% prefer to work for employers who contribute to social causes aligned with their personal values; and most of them believe that money is not the greatest measure of success.  According to the report, of the ten least‐liked brands among millennials, four belong to the nation’s most powerful banks!  When you add to this the Great Recession and the volatility of the markets that has ensued, you see a state of general distrust towards financial institutions, especially among the millennial generation.

Millennials in general, impose different requirements on wealth managers than the previous generations.  The fact that they will be the largest client group is driving many wealth managers to reassess their business model as well as the way in which they interact with clients to identify which adjustments are necessary to successfully serve them.

In line with these millennial trends is a shift in the industry to greater adoption of impact investing.  Impact investing refers to investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.  The wealth management industry has been built on the premise that safeguarding and growing clients’ assets is the primary objective.  From time to time, a discussion around charitable giving might come up, but the primary focus has always been on financial returns, above all else.  Yet, the new generation of clients is intently focused on impact and they don’t believe that money and wealth are the only measure of success.  They seem to be distrustful of large, established institutions like banks and are generally uncomfortable with the conservative culture of finance.  According to Brookings, 71% of millennials “would rather go to the dentist than listen to what banks are saying.”  Advisors need to be mindful of this trend and be prepared to offer a socially responsible portfolio for their new clientele.  This alignment of interests could be the difference in winning over the next wave of investors.

The other trends we are seeing are around instant access and digital platforms.  When I say instant access, I mean instant access to everything, from data and products to services and people, has been woven into the DNA of affluent millennials from an early age.  This generation will expect, and even take for granted, instant access to wealth management products, services and professionals.  Millennials embrace self-education and expect their financial service providers to offer the tutorials, videos and other interactive tools to enable their decision making.  Adopting digital platforms is becoming more important every day.   We are even seeing industry giants like Fidelity Investments acquire platforms such as eMoney Advisor, LLC to embrace the trend and meet the needs of this generation.  A new client, young or old, has expectations of 24/7 access to information that is readily available on a smartphone, tablet or desktop computer.  They want to have some control over what and how they see their assets.  As far as digital platforms are concerned, wealth managers need to develop a more flexible service platform to accommodate self-management through online tools.  Technology and self-education enable millennial investors to participate in the wealth management process to a greater degree than most of their older counterparts.

Historically we’ve spent a tremendous amount of time focusing on retirees and retirement needs that we’ve sort of taken our eye off the ball with regard to the emerging millennial investor base that is becoming increasingly significant in terms of numbers.  It’s not so much about wealth yet, because they have yet to accumulate significant wealth, but they’re partly at the core of this robo-advisor movement.

Millennials are also just very different types of investors; they are far more cautious and risk averse than prior generations.  What’s interesting about these things when coupled together is that we have an investor base that increasingly looks less and less like the advisor base, which is predominantly comprised of middle-aged men.  That’s going to continue to create challenges for advisors who are trying to serve clients who don’t share the same perspectives and life experiences.  With that said, the industry has done little to change its makeup, as many firms fall into this category.  It is important in today’s day and age to maintain a diverse practice that will attract the likes of millennials.  We at Hightower Westchester have put forth a plan with our personnel to exemplify just that.

After all, millennials and Generation X stand to inherit $41 trillion from baby boomers over the next 40 years, in a major intergenerational transfer of wealth.  As their access to capital expands and their influence over family assets strengthens, millennials will demand that their investments become increasingly aligned with their values.  Wealth advisors who can point them in the right direction will have a significant competitive advantage.

The wealth management industry has a unique opportunity to be at the forefront of an important move in social and cultural values.  So the next time you see a client or financial advisor strolling through the office in a pair of Toms, take notice.  By meeting the growing millennial demand for impact investment products and services and instant access and digitization, the wealth management industry can serve as a major change agent of our time.

Richard Flahive – Senior Wealth Management Analyst – HighTower Westchester
914.825.8639 –

HighTower Westchester is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

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This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.