A new Bank of America Private Bank study found that 80% of young, wealthy investors are turning to alternative investments. Young investors are allocating three times more to alternatives than previous generations.
Additionally, 75% of high-net-worth investors between the age of 21-42 don’t expect above average returns just from traditional investments, compared to 32% of investors over age 42.
Here’s what this means for financial advisors.
Why it matters for financial advisors
As much as $68 trillion will be passed down from 45 million US households over the next 25 years: One of the largest wealth transfers in recent history, hence the name “The Great Wealth Transfer.”
According to Nasdaq, reports state that anywhere between 45 to 80% of heirs will likely switch financial advisors once their money is inherited.
As a whole new wave of clientele prepares to switch advisors, there’s great opportunity for advisors to win new clients. But advisors must be prepared to align with the next generation’s portfolio preferences.
How financial advisors can win the next generation of wealthy investors
The 60/40 portfolio is outdated in the eyes of the younger generations.
Not only are younger generations interested in alternatives, they’re already investing in them. Already 47% of Gen Z holds crypto, and technology platforms like Gridline, Fundrise, and more are allowing investors to diversify their portfolios without the large sums of money they once required.
To win clients who are already investing in alternatives, as well as incoming clients inheriting wealth from their predecessors, it’s imperative for advisors to have a system in place to help manage them.
AltExchange’s AdvisorVue provides financial advisors and their clients:
- Real-time reporting and consolidation of alternative investments.
- Historical reporting on existing investments.
- Automatic collection of tax documents (K1s, 1099s).
- Fully-managed capital calls (automated reminders & notifications).
- Integrations with existing wealth management systems (e.g. Addepar, Black Diamond), allowing advisors to bill for individual investments or account-wide.
With AdvisorVue, advisors can easily offer alternative investments and automate the tracking, reporting, and management process in one simple solution.
If you’re an advisor interested in streamlining your alts workflow, please book a call or schedule a demo.