Fidelity Investments: Gen X and Millennial Millionaires Want 16% Returns

November 10, 2017 — 12:55 PM EST

The face of wealth in the U.S. is changing, with more Generation Xers and Millennials becoming millionaires. But a recent report by Fidelity Investments finds that, unlike their predecessors, members of the younger generations are looking for better returns and more customized advice.

According to the Boston-based financial firm, millionaire Gen Xers and Millennials expect a 16% return on their investment compared with the 7% return that Baby Boomers are looking for. What's more, 62% of Gen X and Millennial millionaires want their financial advisor to provide them with more comprehensive services, with 53% saying that they would find a new advisor if their current one isn't using technology. That compares with 25% of baby boomers who expect more from their financial advisors and 29% that want a tech-savvy financial planner.

Fidelity Investments found that Generation Xers and Millennials currently account for 18% of millionaires, which is up from 8% in 2012. In addition, only 58% are currently working with a financial advisor, which is down from 72% in 2012. The firm said that, by 2030, Gen Xers and Millennials will surpass Baby Boomers in terms of having the most wealth in the U.S.

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"With the percentage of Gen X/Y millionaires using an advisor on the decline, the industry needs to take a step back and ask: What can we be doing to 'tip' these investors toward valuing advice?" said David Canter, head of the registered investment advisor segment at Fidelity Clearing and Custody Solutions, in the recent research report. "Gen X and Millennials don't manage their finances in the same way that their parents did – they want an advisor who will be their own personal CFO and organize and simplify their financial lives." Fidelity said that the wealthy Generation Xers and Millennials on average have retirement assets of $1.65 million compared with the $750,000 Baby Boomers have in their coffers. They also earn more – averaging $200,000 – compared with the $125,000 Baby Boomers are bringing in.

Fidelity also found that 69% of the younger investors have referred at least one person to their advisor in the past year, which is much higher than the 48% of Baby Boomers who have done that. What's more, 49% said that they would meet with their parents' advisor, but only 16% of financial advisors are actively targeting these younger investors, presenting a big opportunity. Fidelity Investments noted that advisors should be providing online access to statements, reports and financial records via a website or an app, and that they should stay on top of the latest ways to enhance the client experience through technology in order to win over this growing group of millionaires.