Growth Opportunities

by | Jun 29, 2016 | Asset Management

We talk about growth opportunities all the time here at the office.  But some of our “growth opportunities” may differ from yours.

Advisors need to look forward, and think about growth opportunities in their business, in addition to opportunities in markets and stocks.  A little bit of critical thinking is needed when considering where the business will be heading in the future.

What works today may not be effective in ten years.  Or maybe even in five years.  The current “one size fits all” approach (which many in the investment industry still employ), may not be a sustainable business plan.

It’s worth some consideration at least.

Along those lines, it’s our feeling advisors should not “pass” on millennials.

Or turn away business (in general) because it may not meet a “minimum.”

There is a belief taking on smaller accounts will make an advisory firm less productive.  We care immensely about productivity, as much as any other advisory firm.  But in the future (or even in the present), requiring high account minimums is not the path to optimizing productivity in the asset management business.  If we offer asset management solutions which are common-sense and low-cost, it creates an opportunity for individuals to grow alongside us.

Here’s a reason why it could be a bad idea for investment advisory firms to thumb their nose at millennials or potential clients who may not (currently) meet their account minimums:

We recently discussed an excellent post over on Bill McBride’s Calculated Risk site, on US Demographics.  It’s interesting to see how (in just a few years – 2020), five of the most common ages in the United States are projected to be mid-twenties, and the oldest “most common age” was just 35.  That’s not very far away.

Contrast with the information from the Census Bureau from just a few years ago (in 2010).

Seven of the ten most common ages in 2010 were over 40 years old, the other three in the top ten were 18, 19 and 20 year-olds.  In 2010 and years prior, more and more of the population was aging.  This group (the baby boomers) is now sliding into the retirement phase pretty quickly.

McBride argues this “youth movement” can paint a very positive forecast for housing and the economy.  Ben Carlson, over at, takes this idea one step further:

Ben reminds us much ink has been spilled over the “crisis” of baby boomers retiring at such a fast rate.  Some speculate there won’t be enough “workers” in the labor force to support the retired American (baby boomer) public.  As Ben writes “If demographics are destiny…” then we need to pay heed to the large numbers of boomers retiring.  But don’t overlook the growing population coming right down the road behind them.

We agree with Ben: it’s important to remain optimistic there will be millennials who will have families, buy homes, fill those homes with furnishings, along with minivans, SUV’s and such.

In a conversation on Twitter, I asked Ben “as millennials settle down” (presumably in their late twenties and early thirties), will they want to use a robo-advisor (computerized program) or work with a human advisor?

Some millennials (and some baby boomers) may feel comfortable managing their investments on their own.  A certain portion may sign up with a robo-advisor for a computerized asset allocation approach.

But some may feel they no longer have the time to devote to managing their assets on their own.  Or (as we have heard many times when meeting new clients) they may feel this money is simply growing too large for them to handle on their own.  Or they would prefer someone else keep an eye on these assets.  Many times we’ve had meetings begin with the phrase, “this is getting to be a serious (or “large,” “important,” etc.) amount of money for us, and we don’t want to fool around anymore.”

Let’s also not overlook a certain portion of assets will transfer from an aging population to future generations.  However, while financial firms are too busy salivating over the potential trillions of dollars of money in motion, they often overlook a growing amount of assets currently in the hands of retirees may pass directly from older generations to nursing homes, hospitals and healthcare (life-care) costs.

There are many reasons to feel optimistic about the future of the economy, and the markets.  And about growth opportunities.  Even the demographics are lining up in our favor.

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