Baby boomers account for 39.9 per cent of the total customers who purchase wealth management products from a professional adviser, new research from Roy Morgan has revealed.
The “Single Source” survey of over 50,000 consumers, including more than 34,000 with superannuation or managed funds, defined professional advisers as all types of financial planners, advisers and accountants.
Generation X holds the second largest share of those who purchase wealth management products from an adviser at 27.5 per cent, followed by pre-boomers at 15.8 per cent, millennials at 13.1 per cent and generation Z at 3.7 per cent.
The reason for the dominance of baby boomers firstly has to do with the fact the average balance they hold in wealth management is well above average at $474,000 compared to the market average of $225,000, the research said.
In addition, they number over 3 million compared to 848,000 pre-boomers with wealth management products.
Generation X is the biggest group with just over 4 million with these products, but they have a much lower average balance than baby boomers and, as a result, are less involved with professional financial advisers.
The research showed the client base of professional advisers is predominantly over 40.
When it came to pre-boomers with superannuation, managed funds and any kind of wealth management product, almost half, 46.5 per cent, of those born before 1946 had purchased them from a professional adviser, well above the level of all other generations.
This is most likely due to the fact they have a greater need for financial advice as they stop work or prepare for retirement, combined with their much higher average balances, which brings with it greater involvement in decision-making, the report said.
Furthermore, while nearly one in three baby boomers, 31.7 per cent, with a wealth management product purchased it from a professional, they still relied much more on their employer, with 68.4 per cent doing so.
Generation X also relied more on their employer when purchasing one of these products at 83.8 per cent, compared to only 17.0 per cent for professionals.
The report found younger generations are much more reliant on their employer due to superannuation being their dominant wealth management product and their lower average balances.
“This research shows that with only around one in six obtaining their wealth management products through a finance professional, there is a big opportunity to expand their use,” Roy Morgan industry communications director Norman Morris said today.
“Given the complexity of this market and rule changes, professional advice is probably necessary for most, particularly as balances grow, but it appears that only when balances approach a few hundred thousand dollars or retirement approaches that advice is sought.”
