A VC backing Bloomberg challenger Sentieo explains how fintechs focusing on millennials are missing out on a $14 trillion market

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Senior citizens listen to Republican presidential candidate Sen. Marco Rubio (R-FL) as he answers questions during a campaign town hall meeting at the Sun City Hilton Head's Magnolia Hall February 11, 2016 in Okatie, South Carolina

• Ben Cukier, a partner at venture capital firm Centana Growth Partners, says fintechs should cater their products to Baby Boomers and Generation X, where a majority of US wealth resides.
• As Baby boomers retire over the next 10 years they'll pull $14 trillion out of their 401ks, creating a huge market for fintechs to tap into.
• Fintechs in the wealth management space have done a good job of attracting millennials, but have struggled to make a profit due to their low fees and clients' lack of assets.

A good rule of thumb in business is to follow the money.

That's why Ben Cukier, a partner at venture capital firm Centana Growth Partners, believes fintechs would be better suited to shifting their focus.

In recent years, financial startups have specifically marketed products towards millennials with a goal of serving as the younger generation's introduction to investing. In theory, as the wealth of its customers grows, so too would the company.

However, Cukier, who has backed fintechs including Bloomberg challenger Sentieo, said many digital wealth companies should instead look cater to older generations to try and tap into a $14 trillion market.

"If you look where the money is in the US, over 80% of the money is owned by the Baby Boomers and the Baby Boomers parents, what is known as the Lost Generation," Cukier said at a conference in New York on Wednesday. "Those guys are retiring. They are facing life problems that are very different from the millenials. How long are they going to live, which changes how well you spend."

Read more: HSBC just set out how hard it is for robo-advisers to break even and says a wave of consolidation is inevitable

Fintechs in the wealth management space have aimed to appeal to millenials with low-fee products and sleek designs. And while several in the space have garnered lofty valuations, turning a profit has proved difficult.

With their tight margins, a customer base that has limited assets, and high client-acquisition fees, moving out of the red and into the black has proved difficult. A recent HSBC report suggested North American robo-advisers need to manage between $11.3 billion and $21.5 billion to break even. Only two startups - Betterment and Wealthfront - sit within that range.

Meanwhile, Baby boomers and Generation X, which have begun to inherit money from the latter, control a vast majority of US wealth.

And as older generations prepare for their retirement, Cukier said fintechs should look help with the process, all while tapping in to a significant market.

"You are going to see massive decumulation in the Baby Boomers that are retiring and pulling money out of their 401ks," Cukier said. "That is not billions of dollars. That is $14 trillion over the next 10 years that is going to move. If you can capture even a small portion of that, that blows away what the robos have done today - digital advisors - that are all aimed at the millenials."