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My neighbor and I were chatting last week about financial advisors. She was not very impressed with the communication and performance of her advisor. Now, we have similar financial situations and families, however she is younger than I am. She is on the younger side of Gen X, while I am on the younger side of Baby Boomers. Another thing that struck me about this conversation was that a few weeks prior to our conversation she had introduced someone to her advisor.
This interaction got me wondering if there are differences in the levels of satisfaction, or the frequency of referrals, by generation. I was not surprised to find that there are some significant differences in these topics by age, yet there are also some areas of advisor satisfaction that are similar, despite generational differences. Spectrem recently published the report “How Advisors Can Increase Referrals and Satisfy Clients” and we found that overall satisfaction with an advisor varies only slightly by age, with Gen X being the least satisfied at 87 percent feeling their advisor is excellent or very good, up to WWII investors being the most satisfied at 92 who indicate their advisor is excellent or very good. The investor’s satisfaction of their advisor’s knowledge and expertise is also very similar, with Gen X being the lowest at 88 percent, and WWII being the highest at 93 percent.
An advisor being responsive to requests is where we start to see a slightly larger variation between the generations. Millennials are the least satisfied with how responsive their advisor is to their requests, with 85 percent indicating their advisor’s responsiveness is excellent or very good. Ninety-four percent of WWII investors feel that their advisor is excellent or very good with their response to requests. Advisor performance also has a similar 10-point gap, with 82 percent of Gen X feeling their advisor’s performance is excellent or very good, while 92 percent of WWII investors feel similarly.
It came as no surprise that Baby Boomers and WWII investors are more likely to recommend their financial advisor to a friend or colleague, with over two-thirds of those generations likely to recommend their financial advisor. Only fifty-three percent of Gen X and 56 percent of Millennials would be likely to recommend their financial advisor. However, the frequency of those referrals is different, with over a quarter of Millennials having referred their financial advisor six or more times in the past year, while only six percent of Gen X investors have referred their advisor that often in the past 5 years, and Baby Boomers and WWII investors are even lower.
Younger investors are slightly less satisfied with their advisor, yet they are more likely to refer their advisor. That seems to be counterintuitive, however that contradiction in behaviors is something that Spectrem sees throughout our research. We will soon be publishing a new report that investigates even deeper the relationship between Millennials and Gen X and financial advisors so be certain to reach out to your Spectrem contact if you would like further information.
Related: How Women Select an Advisor