Young, Rich and Hard to Reach

Nearly 10% of affluent investors in the U.S., with investable assets of at least $100,000, are younger than age 30 (born in 1982 or later)—a population that lacks even a basic awareness of many of the leading mutual fund companies and products they offer, according to a study by Cogent Research.   

Based on the ways this age group gathers and consumes information, firms will need to dramatically alter how they engage with affluent Gen Y investors, especially as their wealth and numbers increase.    

As a group, affluent investors are familiar with an average of ten mutual fund firms, while Gen Y investors are typically aware of half as many (about five brands), the study found. Compared with their older counterparts, they are far less likely to recall recent ads by any fund companies. They rely more on different contact methods to connect with investment firms. Older people watch commercials on TV, read newspapers and listen to radio—channels that Gen Y does not use.   

If you want to gain a quick appreciation for how different Gen Y is in the way it consumes information, simply ask a twenty-something how they get their news, stay current with their favorite programs, and learn about new products,” said Meredith Lloyd Rice, Cogent Research senior project director and author of the study. “The chances are high that TV commercials, newspapers and radio won’t even be part of the equation.”  

Advertising via traditional outlets alone is not the best way to reach younger investors, and firms will need to work harder to find better ways to engage with them, the study advised. This population lags the general group of affluent investors by 18%, when considering traditional advertising by mutual fund companies. But for social media, Gen Y has a 31% lead over affluent investors as a whole group.   

Social media platforms, company website/blogs, or targeted materials for financial advisers or defined contribution retirement plans are all possible channels of engagement, the study found.      

“Demonstrating a commitment to caring about Gen Y investors and engaging with them meaningfully in places and through media where they spend their time and energy makes sense,” says Lloyd Rice. “The companies that get there first and do it better will be leaps and bounds ahead of the competition.”  

The annual Investor Brandscape report is based on a representative survey of more than 4,000 investors within the U.S. with investable assets of at least $100,000.   

More about the study is here.  

—Jill Cornfield