Monday, 15 July 2013 14:03 admin
In an article in the Wall Street Journal’s online edition, Matt Reiner addresses the growing connection between Gen X and Y investors and exchange-traded funds. As the Gen X and Y population growth continues, and seems to easily surpass that of Baby Boomers, they only make up 3% of the wealth advisory industry client base.
Current research supports that this growing demographic will be a driving force in profitability yet most advisors are not targeting them as priorities due to them generally being less advanced in their careers and having lower affluence in terms of saving.
Despite their less than attractive appeal in terms of more affluent investing, numbers indicate that almost half of affluent investors under the age of 30 own ETFs which is making a real connection with the Gen X and Y crowd.
That’s a key when dealing with younger mass-affluent clients, says Matt Reiner, chief investment officer at Atlanta-based Capital Investment Advisors in Atlanta, with $1.1 billion in assets. “With more affluent investors, we can use institutional-level mutual funds that require higher minimum investments,” he says. “With a bigger pool of assets, we can also buy enough individual securities to build well-diversified portfolios.”
In 2011, his firm helped to launch a separate advisory service, Wela Strategies. Its portfolios are almost entirely made up of ETFs, providing an opportunity for many of Capital Investment’s more sophisticated strategies to be made available to investors with as little as $10,000 in assets, Mr. Reiner says.
The startup has attracted about $60 million in assets so far. “ETFs give us the ability to adapt a management process that’s based on institutional-level research to manage portfolios for younger and mass-affluent investors,” Mr. Reiner says.