Age and wealth are factors in financial advisor usage, as baby boomers grapple with more complex financial issues
Baby boomers have a characteristically independent streak when it comes to investing, but they will reach out to financial advisors to help them prepare for life’s transitional financial challenges.
The wealthier baby boomers (with a net worth between $5 million and $24.9 million, not including primary residence) are more likely than their younger counterparts to say they enjoy investing, according to ongoing Millionaire Corner research. A majority (52 percent) of Ultra High Net Worth baby boomers surveyed said that investing is something they do not want to give up, compared to 32 percent of Mass Affluent boomers with a net worth between $100,000 and $1 million. They are also more interested in being actively involved with the day-to-day management of their investments (55 percent vs. 40 percent).
Not surprisingly, these wealthier baby boomers have a much higher self-regard for their financial knowledge. Twenty-seven percent consider themselves very knowledgeable about financial products and investments vs. 7 percent of Mass Affluent boomers. This may be in part why these baby boomers are more willing than less wealthy boomers to take a significant investment risk on a portion of their investments to earn a high return.
(Generally, boomers across all wealth levels describe their risk tolerance as moderate, while nearly half feel it is more important to protect their principal)
Age and wealth are factors in financial advisor usage, as baby boomers grapple with more complex financial issues, such as estate planning and business divestiture. The recent fiscal cliff deal also has also made tax planning a priority.
One-fourth of wealthier baby boomers we surveyed describe themselves as self-directed investors, meaning they make their own decisions without the assistance of an financial advisor. But they are more likely than their less wealthy counterparts to consult in some fashion with a financial advisor to help them navigate the challenges they face in maintaining their financial situation and planning for retirement.
More than one-fourth (27 percent) of Ultra High Net Worth baby boomers consult regularly with a financial advisor, but make most of their own final decisions regarding their investments. Eighteen percent rely solely on a financial advisor to make investment decisions for them. Thirty percent consult with an advisor to address specific financial needs, such as retirement planning or asset allocation guidance.