Bridging thegeneration gap:
five ways to attract
investors andcreate competitive
advantage

Bridging the generation gap: five ways to attract investors and create competitive advantage

2

Wealth firms need to adapt fasterto the modern investor’s needs

1

Scope to build greater trust withyounger generations

4

Tuning in to digital

5

Mixed views on 2023 requirea personalised approach

Ninety-three percent of Baby Boomers and 86% of Generation X andMillennials say that their financial advisors understand their goals
and values. While Baby Boomers, Gen X and Millennials all have highlevels of trust in their financial advice, younger generations do exhibit
slightly less confidence.

2Investors require differentiatedalternative investment strategies
Forty-eight percent of Millennials and 35% of Gen X would like todiscuss cryptocurrencies with financial advisors. These investors want
to be informed about a range of alternative and digital assets from
crypto to hedge funds, ESG investments and private assets.

3Index strategies: an untapped opportunity
Sixty-six percent of investors with financial advisors would like to discussindex investing with them – revealing that there is still a strong desire forthese strategies which may present an untapped opportunity. Investors
want to use index funds to diversify their existing portfolios and for longterm performance.

Thirty-three percent of Millennial investors and 21% of Gen X use social
media to gather insights and ideas, compared to only 3% of Boomers.
Millennials and Gen X want to receive information in easily digestible
digital formats with channels such as YouTube and Twitter continuing
to grow in use among investors.

When asked about their likely action if the major stock markets should
decline in 2023, 40% of investors say they would maintain their current
portfolio while 35% see it as a buying opportunity.

Bridging the generation gap: five ways to attract investors and create competitive advantage

3

1. Scope to build greater trustwith younger generations
It is a credit to wealth firms that retail investors on the whole are happy with how they
have steered their portfolios through the volatile markets of recent years. But Gen X
and Millennial investors are slightly less satisfied than Baby Boomers, suggesting there
is a need for wealth firms to better adapt to the preferences of younger generations.
Nine out of 10 (92%) clients say that they are satisfied with their advisors, with six outof 10 (59%) very satisfied. But drilling down into investor perceptions shows that wealthfirms are more in tune with the needs of Baby Boomers (aged 57+) than Gen X (41-56)
and Millennials (25-40). For instance, 93% of Boomers say that their financial advisors
understand their goals and values, compared with 86% of Gen X and Millennials.
Younger generations are also less confident that their advisors are critical to theirinvesting decisions and success. Seventy-five percent of Millennials and 78% of Gen X
with financial advisors agree that their advisors play a vital role – fewer than the 82%of Baby Boomers.

84%

84% of Millennials statethat advisors provide a
personalised investingexperience based on
their needs.

What’s more, while 93% of investors aged 57+ agree that advisors provide a
personalised investing experience based on their needs, that number falls to87% of Gen X and 84% of Millennials.
It’s fair to say that levels of trust are high even among younger clients, butwealth firms have the scope to raise them to match Baby Boomers’ levelsof confidence. To achieve this and attract modern investors, advisors must
understand the unique needs of Gen X and Millennial investors whileproviding personalised services, differentiated data, actionable insights andintuitive digital experiences.

Bridging the generation gap: five ways to attract investors and create competitive advantage

4Older investors are more confident that their advisors are critical to their investing decisions and success
Helps manage expectations during volatility or
times of uncertainty

84%
87%
94%

Understands my personal beliefs, goals and values

86%
86%
93%

Provides truly personalised investing experiencebased on my needs

84%
87%
93%

Extensive knowledge of new and/or alternative
asset classes

85%
87%
91%

Focused on improving my holistic financial position
regardless of compensation

78%
82%
86%

More important now due to development in financial
tech, digital channels and data sources

80%
79%
85%

Critical to my investing decisions and success

75%
78%
82%
Millennials (25-40)

Gen X (41-56)

Boomers+ (57+)

Do you agree or disagree with each of the following statements
about your financial advisor?

Bridging the generation gap: five ways to attract investors and create competitive advantage

5

2. Investors require differentiatedalternative investment strategies
To attract and successfully engage with Gen X and Millennial investors, wealthfirms must provide information about cryptocurrencies, ESG investments andalternative investments. These often are different to the asset classes that appeal
to Baby Boomers.
For instance, younger clients want to know more about cryptocurrencies. Almost
half (48%) of Millennials and a third (35%) of Gen X say they would like to discussthese digital assets with their financial advisors: by contrast, Baby Boomers arelargely uninterested – just 5% of them would like to have such a discussion.
Similarly, younger generations are more interested in receiving information about
ESG investments and a range of alternative assets such as hedge funds, private
investments and real estate. There’s even an interest in art as an asset class.
To differentiate themselves from competitors and attract Gen X and Millennial
investors, wealth firms need to understand which investment classes are ofinterest to their clients and enhance their offerings by providing trusted dataand insights on alternative and digital assets, including ESG investments,
cryptocurrencies, NFTs, real estate, private assets, hedge funds and index
strategies (see next section).

33%
Millennials

23%
Gen X

4%

Boomers

A third of millennial investors are interested
in receiving more information on NFTs, while
23% of Gen X and only 4% of Baby Boomers
show an interest.

Bridging the generation gap: five ways to attract investors and create competitive advantage

6Generation X and Millennials more likely to want information about crypto and other alternatives
Index-based funds/ETFs

53%
42%
28%

Cryptocurrency

48%
35%
5%

Real estate

43%
24%
14%

NFTs

33%
23%
4%

Private companies

28%
29%
13%

Hedge fund investing

23%
25%
5%

ESG

23%
22%
9%

Tokenised assets

12%
10%
0%

Art valuations

8%
10%
2%
Millennials (25-40)

Gen X (41-56)

Boomers+ (57+)

Which of the following areas are you interested in receiving information about
and/or discussing with your advisor?

Bridging the generation gap: five ways to attract investors and create competitive advantage

7

3. Index strategies: anuntapped opportunity
With retail investors planning to increase their index-based holdings, there is an
opening for wealth firms to add value by providing sound advice about how toincorporate index strategies within their portfolios to improve diversification and longterm performance. Regardless of age, nearly four in 10 (38%) US retail investors whoinvest in index strategies plan to increase their investments this year.
Yet almost half of people with advisors (45%) say they have not discussed index
strategies with them. What’s more, two thirds (66%) of those who haven’t discussed
index strategies with their advisor would like to do so – revealing the scale of thisbusiness opportunity.

66%

Two thirds of investors withfinancial advisors would like themto discuss index investing andstrategies – showing the scale ofthis untapped opportunity.

Bridging the generation gap: five ways to attract investors and create competitive advantage

As ever, information is key. Almost four in ten (39%) clients with financial
advisors want to receive more information about index strategies. Thispresents wealth firms with an opportunity to include more recommendations.
Just as investors are becoming more interested in the advantages of
low-cost, easily traded index strategies, so wealth firms need to begin
offering advice and information about them. The fast-growing range of index
strategies presents options to refine portfolios, taking advantage of emergingopportunities while using diversification to further mitigate risks.

Most respondents plan to maintain or
increase their use of index funds this year

Increase

38%

Decrease

59%

Maintain3%
In 2023, do you expect to increase, maintain or
decrease your use of index funds?

Bridging the generation gap: five ways to attract investors and create competitive advantage

94. Tuning in to digital
When it comes to communicating, not surprisingly the younger generations prefer
to use digital technology than have in-person interactions. For instance, Gen X
would just as soon receive an email as a phone call – while 55% of them say they
prefer phone calls, 56% prefer email.
Self-service digital channels are an important source of information and ideas foryounger investors, with 30% of Millennials saying that they use YouTube and 33%
social media such as Reddit, TikTok or Twitter to access investment advice andinformation.
Wealth firms can lean on market sentiment data to monitor social media opinion –which also distills news content, providing sentiment indicators to augment trading
strategies, volatility forecasting and risk management. While many firms are alreadydeveloping their social media presence on digital channels that are widely used by
Gen X and Millennials, by harnessing market sentiment data these firms can attract
new investors and increase their engagement.

33%
Millennials

21%
Gen X

3%Boomers

Digital sources play an important role in the investment
decision process for younger investors, with 33% ofMillennials and 21% of Gen X using social media to gather
insights and ideas, compared with only 3% of Boomers.

Bridging the generation gap: five ways to attract investors and create competitive advantage

10Digital sources play an important role in the investment decision process for younger investors
My financial advisor

52%

My own gut instinct

27%

Print media/news sites (e.g., WSJ, Yahoo! Finance)

26%

Investment newsletters/subscription services

24%

Market data platform (e.g., Bloomberg)

22%

Research papers and market analysis pubs/journals

22%

Peer recommendations

18%

Social media (e.g., Reddit, TikTok, Twitter)

16%

TV

16%

YouTube15%

In-person conferences/seminars

12%

Podcasts

11%

Screening engines (e.g., MF screeners)

9%

Millennials (25-40)

30%

Webinars

6%Gen X (41-56)

18%

Other

3%

Boomers+ (57+)

4%Where do you get investment insights and ideas?

Use of social media, by generation
Millennials (25-40)

33%

Gen X (41-56)

21%

Boomers+ (57+)

3%

Use of YouTube, by generation

Bridging the generation gap: five ways to attract investors and create competitive advantage

11

5. Mixed views on 2023 requirea personalised approach
When asked about 2023, investors are as likely to take chances for larger gains
as they are to avoid investment risk. When asked if they are taking a “risk-on” or“risk-off” approach, investors are evenly split at 37% each way – with the remaining
26% not sure.
However, when asked about their likely action if the major stock markets should
decline in 2023, 40% said they would maintain their current portfolio and 35%
see it as a buying opportunity. Only 13% said they would move to a moreconservative portfolio.

What would you do if the stock market declined in 2023?

Risk-on versus risk-off

37%
Risk-onUnsurprisingly, younger investors were more willing to take on risk – with
Millennials being most bullish. Fifty percent say that they would treat a major
stock market correction as a buying opportunity, which might well occur if highinterest rates and stress in the banking sector were to lead to a hard landing forthe global economy. Wealth firms may leverage this to provide Millennial investors
with information about long-term investment opportunities arising from 2023’s
volatile markets.

37%
I don’t know

26%

Ride it out/keep my portfolio as is40%

View it as a buying opportunity

35%

Reallocate to a more conservative portfolio

13%

Not sure

12%

Bridging the generation gap: five ways to attract investors and create competitive advantage

12

Concluding thoughts
Our survey shows that at a time when younger generations areembracing new investment products and more digital content – eventhrough market volatility – wealth firms have an opportunity to attract
investors who are hungry for index strategies, alternative and digitalassets, media sentiment and personalised digital communication.
Wealth firms need to show the value of their offerings bypersonalising advice and strategies to suit different generations.
For instance, 48% of Millennials and 35% of Gen X would like theiradvisors to discuss cryptocurrencies – therefore these alternative
asset classes must be included in discussions with younger investors.
Thirty percent of Millennials say that they use YouTube as a sourceof information and ideas, going beyond what’s provided by theiradvisors. Wealth firms must therefore look at continuously evolving
and expanding their digital channels to attract and engage investors.
Given these findings, wealth firms have an opening to differentiatethemselves in the eyes of investors. They can do so by taking thefollowing five actions:

1. C ustomise their service, product offerings and information to theneeds of Millennials and Gen X.
2. Provide information, advice and education about
cryptocurrencies, ESG investments and the full range ofalternative and digital investments.
3. Discuss index strategies with investors, delivering informationand education about how they can be used to diversify broad
portfolios and improve returns.
4. Harness the power of market sentiment data as a tool to provide
advice while simultaneously building and evolving a strong social
media presence.
5. Educate investors on the risks and returns of long-term
investment opportunities that may emerge from any market
volatility during 2023.

About our research
In November 2022 LSEG surveyed more than 1,000 US retail investors, who own stocks, mutualfunds or ETFs outside the workplace, on a range of topics related to indexes, index investing andtheir economic outlook for 2023.
The research was conducted by 8 Acre Perspective, an independent marketing research firm. For
more information, visit our website.

LSEG Wealth Solutions
Wealth is all about people. Your clients.
And when every client is unique, off-the-shelf advice is simply off the table.
Our solutions combine world-leading content with an intuitive workflowthat lets you deliver personalised advice to every client to achieve greater
financial wellness.

There is no average investor. This is no average solution.

About LSEG
LSEG (London Stock Exchange Group) is more than a diversified global financial markets infrastructure and databusiness. We are dedicated, open-access partners with a commitment to excellence in delivering the services
our customers expect from us. With extensive experience, deep knowledge and worldwide presence acrossfinancial markets, we enable businesses and economies around the world to fund innovation, manage risk
and create jobs. It’s how we’ve contributed to supporting the financial stability and growth of communities andeconomies globally for more than 300 years.
Discover more at lseg.com

LDA3300564/11-23