TD Ameritrade: Next-Gen Investors Want Advice, DIY Tech


Younger investors may have a DIY spirit, but they also want advice, which means that registered investment advisors (RIAs) are going to have to offer a little bit of both to capture the next generation of investors.

That’s been the mantra coming out of TD Ameritrade Institutional, where Kate Healy, managing director of Generation Next, has been putting RIAs on notice – if they don’t embrace the needs of younger investors, they are going to be left behind. “There is a whole different set of challenges with younger investors compared to previous generations, so they are looking for advice at a much younger age,” said Healy in an interview with Investopedia. “Advisors are used to working with boomers on wealth accumulation and don’t have to talk about budgeting. Millennials are saddled with student loan debt. They don’t have a guidebook to follow.”

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According to Healy, advisors who want to grab the next generation of assets need to do more than just provide investment ideas. The younger generations grew up on social media and are very comfortable getting advice and recommendations on pretty much everything, and they will likely expect that from their financial advisor. As a result, younger investors are looking for a financial advisor that can give them career advice, help them with budgeting and paying down debt as well as provide investment and retirement savings guidance. The RIAs that will succeed with these new investors are the ones that are prepared to provide more than asset allocation, said the TD Ameritrade Holding Corporation (AMTD) executive.

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While many RIAs may brush off those warnings, a lot of advisors are also taking them to heart. In May, a TD Ameritrade Institutional poll of RIAs found that 42% said they are overhauling the way they market and network to bring younger clients their way. What’s more, RIAs think there will be a demographic shift in their customer bases, with baby boomers dropping from 46% of the client base today to 43% by 2023. Meanwhile, Gen Xers are expected to represent 27% of the client base, up from the current 21% today, while RIAs anticipate millennials to represent 14%, up from 9%. The number of senior clients RIAs work with is expected to decline to 14% from 23% in the five-year time frame. The RIAs expect 41% of their clients to be Gen Xers or millennials in five years.

RIAs Can’t Be Afraid of Technology

To ready their firms to handle younger investors, Healy told Investopedia that RIAs need to embrace technology and be able to show potential clients that they are tech savvy. After all, the internet and smartphones have changed everything, and younger investors aren’t going to work with an advisor they can’t text or access information from online. “The first thing millennials are going to do is Google your firm, look at your website and your social media feeds,” said Healy. If the website is not up to date, doesn’t show diversity and community service, and the social media postings are stale, millennials will be apt to move on to the next advisor.

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Healy said that advisors with an internet-based client portal are going to fare better in luring young investors their way as well. Millennials don’t want to speak to someone every time they need to check their balance or change something. “It’s better for them, and it’s better for the advisory firm that doesn’t have to waste resources answering questions,” she said. “RIAs have to stop being afraid of technology.”

As for how RIAs can court these younger investors, Healy said that the old way of cold calling isn’t going to work. Millennials don’t answer their phones and are more likely to believe something they read on social media over suggestions from friends and family. They also care about their communities and giving back to society, which presents an opportunity for RIAs.

According to Healy, RIAs have to be active on social media – whether that’s Facebook, Twitter, Instagram or even Snapchat – and highlight the good work they are doing. “You have to be where they are, and you have to make sure you have millennial advisors on your team,” said Healy. “They want to work with someone with experience but also gets why they didn’t buy a house yet or might not own a car because of Uber.”



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