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Young, wealthy pros overturn traditional wealth management model

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Oct 27, 2022
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Fintech roundtable at the Axios BFD event. Courtesy: Beatrice Moritz

If you have more than $500,000 in net worth and are under 45 years old, you probably don’t have an adviser, and you’re not alone. That was the takeaway from a Fintech roundtable at Axios’ BFD Summit yesterday.

Why it matters: That philosophy both threatens the old-school wealth management world and could see 60-40 allocation strategies go the way of the buggy whip.

The intrigue: Among the group of fintech entrepreneurs and investors Axios gathered, there was disagreement on where these funds would go.

  • “We're finding wealthier people who are younger who… want to be able to construct their own portfolio, but they also want access. An adviser is more than advice, it’s access to the products that were generally not available to the retail investor,” The Coterie founder and CEO Ethan Agarwal said.

Yes, but: “You have trillions of dollars of money in motion moving from Baby Boomers to the next generation. Much of what you're hearing here is a shift in consumer behavior,” Yieldstreet founder Michael Weisz said.

  • Weisz argues that 60-40 is dead and that investors demand and appreciate the steady performance of alternative assets in their portfolios.
  • “There's no doubt that there's going to be more alternative assets available to individual investors, and they should have access to them, but alternative assets only work if you stick with them for a really long time,” said Insight Partners managing director Deven Parekh.
  • “Anything that's long term... the illiquidity simply does not work, and whatever spread you get does not compensate you for that illiquidity,” says Sanjay Raghavan, head of web3 initiatives at Roofstock.

Meanwhile, James Faucette of Morgan Stanley believes these entrepreneurs face their own threats.

  • Faucette made the point that low interest rates have had a massive impact on the development of technology, giving startups a longer window to build their business.
  • But as prevailing rates go higher, he believes the window for startups gets shorter.
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