The US's $25 million-plus households, also known as the “1 per cent”, now represent a slightly younger investor demographic, according to a recent Spectrem report which covered several related issues.

The US's $25 million-plus households, also known as the “1 per cent,” now represent a slightly younger investor demographic, according to a recent Spectrem report which covered several related issues.

The mean age of a $25 million-plus investor has dropped by two years from 60 in 2012 to 58 in 2014, with the average net worth much greater among those under the age of 55 ($151.7 million). This compares to $79 million among those between the ages of 55 and 65, and $66.2 million among those who are age 66 or older.

Speaking to Family Wealth Report, George Walper, president of Spectrem, said a number of factors are pushing down the average age of the $25 million-plus investor but that the most notable forces relate to their entrepreneurial and investor-related activities.

Trends

Spectrem, the research firm, said these $25 million-plus investors consider themselves to be knowledgeable about investments and so their expectations of financial service providers is that their advisory provides the expertise they are unable to develop on their own. Indeed, the amount of finance and investment-related information available online is significantly greater now than it has been in the past, Walper noted.

“But some of these younger individuals are also more comfortable doing research on their own - not just when it comes to investing but around numerous aspects of their lives,” he said.

Additionally, $25 million-plus investors “feel a sense of social responsibility, especially those who are younger,” Spectrem's report found. “They want to educate their children regarding financial issues.”

“But a lot of advisors don't spend time developing education programs and meetings with children and grandchildren,” Walper said. “It's going to be important for advisors and firms to have a complete strategy around that over the next ten years.”

It emerged that younger households are more likely to express an interest in having their children meet their advisor. They are also more open to educational programs developed by their advisors more so than older households who are used to the “traditional model of service” and perhaps don't understand how such an approach would work.

Looking at some of the other findings more broadly - and reinforcing the notion that wealthy investors increasingly want to collaborate with their advisors - the report revealed that over half of $25 million-plus investors enjoy investing while a large percentage want to be involved on a daily basis – a trend more apparent among older individuals.

That said, it emerged that younger $25 million-plus investors worry more about their financial situation than their older counterparts and are typically “moderate to aggressive” in their risk tolerance, with their expectations regarding rates of return higher than other investors.

Spectrem also found that around half of the respondents still need to develop a wealth transfer plan while many of these households tend to use an advisory firm after a life event, with 25 and 29 per cent of respondents describing themselves as self-directed and event-driven investors respectively.

Walper said he wasn't surprised by this, given previous evidence pointing to a somewhat limited use of trusts - a key financial planning strategy - for example, among very wealthy families.

With all the above in mind, Spectrem strongly believes that “significant planning opportunities” for advisors and firms are still available.

Each month, the firm surveys more than 1,500 investors, with $100,000 to $25 million of net worth, regarding their investment attitudes and behaviors.