Unlocking Opportunities: Young Investors on the Rise

April 2025

The individual annuity and retail retirement market centers on affluent investors who are retired or close to retirement. LIMRA has done extensive research on these “retirement investors” — workers and retirees aged 40 to 85 with at least $100,000 in household investable assets — who control most of the nation’s wealth and make up the vast majority of individual annuity sales and IRA rollovers.

While the financial services industry rightly concentrates on affluent retirement investors, another group warrants their attention. Emerging affluent investors are individuals who are on track to become affluent later in their lives. They are not close to retirement, nor do they have enough wealth to qualify as “affluent,” yet they are critically important long-term prospects for the kinds of products and services the retirement industry offers. Moreover, each generation of Americans brings a distinctive perspective to financial issues based on their experiences during key life stages. Consequently, future affluent investors may differ from current affluent investors in terms of outlook, preferences and priorities. By understanding emerging affluent investors now, companies can build long-term relationships and trust, positioning themselves to help manage their wealth in the future.

One of the ways that younger generations differ from their elders is in their reliance on financial professionals (FPs) for help with household investment and financial decisions. While their comfort level with digital banking, investing applications, and other financial technologies may be higher than that of older investors, our research indicates many still want professional guidance, especially as their financial situations evolve and become more complicated.

Reasons for Working With FP

Emerging affluent investors — workers aged 25 to 45 with $100,000 to $499,999 in household investable assets — are less likely than retirement investors to be working with an FP. About 4 in 10 emerging affluent investors work with paid financial professionals to help make household financial and investment decisions, compared to 61 percent of retirement investors. The reasons emerging affluent investors began to work with FPs are similar to those given by retirement investors, including having accumulated enough money to justify working with a professional and the realization that managing their finances on their own was too complicated. However, of these two reasons, emerging affluent investors were less likely than retirement investors to link their decisions to reaching a particular wealth level, 29 percent versus 39 percent. That suggests that the younger group may be seeking advice well before their savings exceed what some FPs might consider to be a “minimum” level of wealth, such as $500,000.

Valued Services

For the most part, emerging affluent investor clients closely resemble retirement investor clients in terms of their reasons for working with FPs. Yet the two groups show significant differences in the value placed on the specific services that FPs provide to them.

Emerging affluent investors highly value fundamental services provided by their FPs, such as offering guidance when making difficult financial decisions and balancing risk and reward in their portfolios (Figure 1). More specific services, such as those aimed at minimizing taxes or reducing portfolio volatility, were less commonly cited. Younger investors, thus, recognize they have less experience in selecting among financial choices or navigating through tumultuous economic conditions and want their FPs to offer their perspective and guidance even for basic decisions. They are also more inclined than retirement investors to “strongly agree” that their FPs can anticipate their financial needs before they themselves do, 38 percent versus 23 percent, respectively.

This pattern stands in contrast to the most valued services among retirement investors, who place relatively greater emphasis on principal protection and volatility reduction, as well as tax minimization. In addition, emerging affluent investors are more likely than their older counterparts to be discussing savings and debt reduction/elimination with their FPs, while retirement investors are more likely to be focused on specific retirement planning activities, including income generation and claiming Social Security.

Long-Term Opportunities

Younger investors represent the future of the retirement industry. Establishing relationships with them early can yield long-term benefits for both clients and financial services companies. Our research shows that emerging affluent investors often look for professional guidance due to financial complexity, even before reaching the common assets thresholds that have traditionally triggered advice seeking. Providing financial education and services to younger people can help them make informed decisions, avoid debt, and build a secure financial future. However, FPs cannot spend too much time educating clients about the basics of investments and financial decisions. They need to be strategic in accommodating client demands, given their time constraints and their firms’ business models. Striking the right balance between providing these highly valued services to younger clients and managing time effectively will be critically important.

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