The Boston-based researcher surveyed 5,500 US investors between the age of 18-36, often referred to as millennials, and found that approximately half agreed with the statement, “I am willing to pay for advice regarding my financial investments.”
The figure, based on a poll conducted between January and September 2016, is up sharply compared to 2009, when 38% they would shell out money for advice.
Around 79% of households aged 30 to 39 either agreed or strongly agreed with the statement, “I am willing to pay for advice.”
Meanwhile, a massive 73% of households under age 30 felt the same way.
Young investors are increasingly willing to pay for expert advice to navigate homeownership, pensions and other life changes.
“You’re making the most important decisions under age 40: You get married, you have your kids, you buy your first house,” said Scott Smith, director at Cerulli.
The value and service that financial advisers offer has changed in the last eight years, with a growing emphasis on a diversified approach to investing and providing holistic tax and financial planning advice, add Smith.
“In the 2008 and 2009 crisis, people felt they got burned and advisors didn’t help them avoid that,” he said.
“The industry didn’t frame itself as ‘we’re not market timers; we’re advice providers.’”
Fees-based model
Cerulli’s research also found that 79% investors in the US, where advisers can choose between charging commission or an upfront fee, preferred to pay their financial adviser on a compensation model that charged a percentage of assets, a set retainer fee or an hourly fee.
Whereas, just one in five preferred to pay their adviser on a commission basis.
“There’s this assumption that investors really prefer commissions and that if advisors move toward fee-based, there will be resistance in the client base,” said Smith.
“There is a place for custom advice beyond investment management fees. People aren’t resistant to fees for advice.”
