Financial advisors who want to reach the younger, affluent end of the “Baby Boom” generation had better sharpen their skills, suggests a new study from Spectrem Group.

According to the study, 40- to 45-year-olds, who represent the youngest of the Boomer generation, have more sophisticated financial needs than their older brethren.

A higher percentage of affluent “Barely Boomers”, hold hedge funds, private equity and futures investments than the other Boomer segments for each asset class, according to the new report released today.

In addition, one-third of Barely Boomers hold stock options and 30% hold restricted stock, higher than the other Boomer segments. Looking at asset allocation, nearly a third (31%) of Barely Boomer portfolios is dedicated to real estate.

Spectrem suggests that this presents a unique challenge to financial services providers. Serving the Barely Boomer segment of the affluent market requires advisors who possess a particularly broad skill set.

Just 24% of Barely Boomers use full service brokers as their primary advisors, lower than 37% for Working Boomers (ages 46-60) and 31% for Retiring Boomers (ages 61-70). That is also lower than retirees (ages 71 and up) at 32%. A higher percentage of Barely Boomers chooses accountants (19%), independent financial planners (24%) and investment managers (19%) as their primary advisors than the other Baby Boomer segments.

“Barely Boomers, a phrase we use to describe the youngest of the Baby Boomer set, are quite clearly in the wealth-building portion of their financial lives. Their needs center on saving for education as well as retirement, and they have entered this phase at a time when sophisticated financial products are more prevalent than ever,” said Catherine McBreen, managing director of Spectrem Group.

“Not surprisingly, the Barely Boomers require advisors with a broad range of skills including knowledge of alternative investments, real estate and equity-based compensation. The needs of Barely Boomers, unique among the Baby Boomer generation, present both a challenge and an opportunity for those who can meet these requirements.”

The firm says that there are approximately 700,000 affluent Barely Boomers in the U.S, defined as those ages 40 to 45 with more than US$500,000 in investable assets. Of this group, 88% say their primary investment strategy is building wealth rather than preserving it and 85% have set aside a portion of their assets for more speculative or higher risk investments.

This new report is based on data from Ultra High Net Worth 2005 and the Affluent Study, which was released in early 2005. The two studies were drawn from a total of 969 responses to mail-based questionnaires. The margin of error for this data is plus or minus 4.5 percentage points.