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Practice Management > Building Your Business

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

By Michael S. Fischer

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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.

Just 31% said their business was only local. 

According to the survey, three-quarters of advisors said they have client problems. These are their most common challenges:

  • They listen to bad ideas from their adult children or others: 33%
  • They don’t understand risk: 27%
  • Their expectations are unreasonable: 25%
  • They are uneducated about the financial world: 19%
  • They are too passive: 16% 

As to how they set themselves apart from other financial advisors, 72% of respondents said they use custom portfolios instead of models for clients. 

Outside of their client relationships, 31% of advisors said financial planning strategies differentiate their practice, and 21% said they use customized solutions to stand out. Just 3% said portfolio performance sets them apart. 

Twenty-six percent said that client relationships are their only differentiator. 

Marketing Strategies That Work 

According to 79% of respondents, new client acquisition in 2024 is being driven by referrals without asking. 

Outside their client relationships, 39% said they are winning business this year by asking for referrals from clients, 38% network, 24% hold client appreciation events and 18% conduct educational seminars or workshops.

Digital marketing techniques rank at the bottom of the strategies that survey participants said they have used for new client acquisition: 

  • LinkedIn: 7%
  • Facebook: 5%
  • Social media advertisements: 4%
  • Direct mail: 3%
  • Search engine optimization: 2%
  • Google Ads: 2%

“Advisors are transforming their business, driving their competitive advantages with more customized portfolios and advanced planning, and expanding their reach across the country, thanks in part to technology,” Mee said. “We believe this trend will continue, and we expect advisors will start paying more attention to younger investors as well.” 

Younger investors’ need for advice will grow as they accumulate assets and their financial picture becomes more complex, he said. Advisors need to familiarize themselves with how they are learning about investing, so they can establish relationships based on common ground.

Michael S. Fischer

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