And Now The Bad News: Millennials Will Need To Withdraw $270K Per Year From Their Retirement Accounts

Which profile fits a money manager’s ideal customer – a ‘Mass affluent’ 50-year old or a dead broke 20-something? The wealth management industry would do well to run the numbers, because it is the latter that will generate a larger fee stream over time. How can that be? The short answer is that millennials will live longer, require far more in retirement savings, and use more high margin investment products for longer than their parents’ generation.
This simple calculus seems beyond the reach of an industry that still commonly features high minimum balances for advisory services and does little in the way of outreach to younger customers. So called ‘Robo-advisors’ have begun to gather up this group of younger investors, but there is still plenty of time for the traditional money management industry to service this next, much larger, wave of customers.
Note from Nick: I am 51; Jessica is 21. I have a lifetime of savings, equity in a house, and disposable income to invest. Jessica has a lot of talent and a few thousand dollars saved from her 2 years of full time work. And when I see advertisements for money managers, they all clearly target me. Turns out that is a bad strategy, because the industry will make a lot more money from Jessica than they ever will getting my hard earned shekels to manage. Read on for the whys and wherefores…. And just how much more valuable millennials are than old folks like me.
Are you more afraid of death or poverty? This may seem like an odd question with an obvious answer: the Grim Reaper should engender more fear than an overdraft charge. Surveys, however, surprisingly suggest that poverty weighs heavily indeed on many people’s psyches in light of longer life expectancies and uncertainty about Social Security payouts. Consider these findings:

This post was published at Zero Hedge on 10/13/2015.