Only 18% of Financial Advisors' Clients Are Younger Than 50: Survey

What You Need to Know

Nearly three-quarters of respondents said they use custom portfolios instead of models for clients.
More than 80% of advisors said they have won business from other advisors who failed to communicate with clients.
New client acquisition in 2024 is being driven by referrals without asking.

Financial advisors continue to focus on older clients, according to the latest InspereX pulse survey, released Tuesday. Advisors reported that 59% of their clients are at least in their 60s, while only 18% of their clients are younger than 50.

Nearly three-quarters of advisors said the majority of their younger clients’ assets have come from the clients’ jobs. Only 12% said the majority of younger clients’ assets came from an inheritance. 

Although 60% of advisors agreed that younger investors are being influenced to go elsewhere for advice, 87% still believe that pursuing younger prospects is worth the effort.

At the same time, two-thirds of respondents said they were surprised by how much those younger than 50 rely on social media for investment education. A third each were also surprised that younger investors refused to admit that they need help investing and how low their investment IQ is.

Red Zone Marketing conducted the pulse survey July 8-15 among 487 financial advisors who work at independent broker-dealers, RIAs, banks, regional firms and wirehouses. During the survey period, the S&P 500 reached a high of 5,666.94 and closed at 5,631.22 on July 15. 

Why Advisors Lose Clients

Sixty-one percent of survey participants said that death is the main reason they have lost clients, while 14% acknowledged that they lacked time to nurture the relationship with departed clients. 

“Given the combination of many advisors citing death as the top reason for losing clients, coupled with the small percentage of advisors working with clients under the age of 50, it’s likely advisors are missing opportunities to retain business and engage the next generation of investors and heirs,” Chris Mee, managing director at InspereX, said in a statement. 

Conversely, 82% of advisors said they have won business from other advisors who failed to communicate with clients. They also said they won business from advisors who did not meet client performance expectations, or did not offer enough new or innovative ideas or gave bad advice.

The State of the Advice Business

The survey results showed that financial advisors are growing their footprint. Half of respondents reported that over the past three years, their business has expanded to include both new clients outside their local area and more referrals to clients outside their local area.