Under-40 Is Untapped Market

Fewer than 20% of investors under the age of 40 feel they received adequate financial advice following a recent life event. 

According to research from Cerulli Associates, investors under the age of 40 are often overlooked because of the heavier focus on Baby Boomers, said Kevin Chisholm, associate director at Cerulli. “However, these investors are the key to financial services firms’ long-term success,” Chisholm said.

In the second-quarter issue of “The Cerulli Edge-Retirement Edition,” the Boston-based global analytics firm takes a close look at the characteristics of investors under 40. “Financial providers need to better recognize and identify when these young investors hit various life stages and provide more advice and guidance,” said Roger Stamper, analyst at Cerulli.

“The most significant financial decisions made by households typically occur well before the age of 40,” Stamper noted. “The multitude of life events taking place during these years is likely to dictate younger investors’ interactions with financial providers as they progress through various life stages.” When people make important life decisions without adequate advice, they may find themselves later burdened by these uninformed choices, Stamper said. Later on, they may wish they had received more help at the time

Asset managers and recordkeepers can see this advice gap as a market opportunity, Cerulli said in the report. By providing investors with standard checkups before big life events, advisers will be able to help them more easily navigate these times.

Other findings in the report are:

  • Most successful strategies used to engage investors under the age of 40;
  • Best approaches for recordkeepers to encourage savings among investors under the age of 40;
  • Household balance sheet by age range;
  • Households’ willingness to pay for advice by age range; and
  • Life event with previous 12 months by advice sufficiency and age.

More information on the report, including how to purchase a copy, is at Cerulli’s website.