More than half of US registered investment advisors polled by analytics firm Cerulli Associates say their clients are between 50 and 70 years’ old, suggesting the younger generation are bypassing traditional channels.

More than half of US registered investment advisors polled by analytics firm Cerulli Associates say their clients are between 50 and 70 years’ old, suggesting the younger generation are bypassing traditional channels.

An increasingly powerful trend is that of the “eRIA” – internet-based platforms that tap into a desire to manage investments online, something of particular appeal to younger people.

"Advisors are finding it increasingly difficult to attract young investors," Kenton Shirk, associate director at Cerulli, said. "The endless availability of online resources, as well as easy-to-use direct platforms is diminishing the need for advisors within the do-it-yourself generations,” Shirk said.

The Cerulli study is called Advisor Metrics 2013: Understanding and Addressing a More Sophisticated Population.

The report also comes at a time when demographic changes – the “greying” of populations in some developed nations – means wealth managers need to be aware of how different age groups want to manage money in different ways.

Technology, such as the rise of mobile devices, is also changing how people track their financial affairs. The findings of the Cerulli report may also suggest that investment issues concern older people as they age, while younger people are more immersed with work and careers.

"eRIAs are emerging threats to advisors. They are able to deliver scalable offerings at extremely low costs. Advisors must understand that it will be nearly impossible to compete on price,” Shirk said.

Away from the client age issue, the report also gave data on how the wealth advisory and distribution channels are split up, and who the winners have been in recent changes.

The report said in 2012, the year covered by the data, the fastest rate of growth was seen in the dually-registered channel, within which advisors operate their own registered investment RIA practice while also affiliating with an independent broker/dealer. This grew by 21.5 per cent and the channel’s assets surpassed $1 trillion for the first time.
The RIA channel expanded by 11.5 per cent, the report said.

“Initially, many observers assumed that the dually registered channel would be just a way station on the transition to becoming “pure” RIAs,” the report said.

Another statistic highlighted how wirehouses remain a powerful player, despite fears of retreat. They control more than $5.3 trillion in client assets. The four firms that comprise the channel (Morgan Stanley, Merrill Lynch, Wells Fargo, and UBS) have lost overall market share recently but they beat overall industry growth rates in 2012.

Advisory teams with more than $500 million, dubbed mega teams by Cerulli, control an estimated 42 per cent of the financial advisory industry’s assets, although employing 14 per cent of its advisors.

“These large advisor teams have been net winners post-crisis and successful in winning additional client assets,” the report sad.