Dear Old-School Advisor: Change Your Ways—or Lose Our Business

If you don't have next-gen advisors in your firm, chances of attracting and keeping under-35 millennial clients are slim. 

This Practice Management article is intended for financial advisors only (registered representatives of broker dealers or associated persons of Registered Investment Advisors).
 

What group is 85-million strong, holds $1.5 trillion in purchasing power, and drives the market in every industry but health care? The under-35 generation known as “millennials.”

Financial advisors know by now that they cannot ignore this group. But Brandon Moss, a 35-year-old managing director for United Capital Private Wealth, which has roughly $10 billion in assets under management, homed in on that point at the Dallas Women Advisors Forum on May 21, 2014. At the same time, he identified how challenging it can be for advisors to attract and retain financial advisors.

Where to start: hire the young. “If you have don’t have a next gen advisor in your firm, don’t even try to get a next gen client. It’s not worth the hassle,” Moss says. A population of older white males, whom Moss dubbed “fat dudes,” dominates the financial advisory industry. But that is not the advisor type that the under-35 client wants to work with, Moss says.

To hire younger advisors, Moss recommends looking at the university programs training certified financial planners (CFPs) and drawing them in with “edgier” branding. Once they start working, Moss advises offering the young advisors “straightforward” information. Specify explicitly, for example, the office hours you expect them to keep, if that’s the case. Otherwise, they will set their own. At the same time, he recommends allowing new young advisors freedom, and he warns: “Your management can be their micro-management.” Millennials “are used to working on their own,” he says. His approach: “Guide, don’t direct them.”

But advisors have to make more changes than simply hiring the young, Moss says. He shows a hypothetical memo to make a point: “Dear Old School Advisor, If you don’t change, you will lose. Sincerely, Every One of Your Clients’ Kids.”

What does his ribbing mean in practical terms? Advisors must keep aware of their phones constantly to meet the millennials where they live; they must update all social media so their company’s online presence looks fresh; and they must recognize that, as a category, this younger generation wants “a personalized, self-designed experience.” Consider this: If they buy a CD, they also want the music available on a playlist that they designed, he says. Advisors should review their financial plans and policy statements and see if those allow for enough self-design and personalization.

He warns financial advisors against overselling, since millennials are, as a group, cynical about “anti-selling,” he says. That means on a financial advisory firm’s website the “about us” section should read as if it’s the “about you section,” he says. Millennials will second-guess any bragging a financial advisor attempts. “They will know all your content better than you,” he says.

At the same time, financial advisors should consider their firm’s branding seriously, since the millennials take such matters seriously and identify themselves as “Apple” or “Samsung” people.

In practical terms, Moss says, such strategies may translate into redoing client materials so they are as inviting as, for instance, the box and wrapping used with an online-ordered delivery of a Tory Burch purse.

Other ways he accommodates young clients is that he never asks them to fill out forms, but rather has them prioritize a pack of cards with financial planning objectives. “It’s tangible for them,” Moss says.

Keep in mind that so-called online robo advisors have set a basement price for financial planning, and the young net-savvy prospective clients will know that equals about 15 basis points, Moss says. So real-life financial advisors have to show how their services are worth more than double that by engaging in real planning issues in person and addressing such knotty issues as estate and insurance questions. But, at the same time, they must keep their client relationships as tech-friendly as possible. Moss forgoes long-winded budget discussions and instead helps young clients set up automated payments for the important things, including 401(k) contributions.

He even recommends automating those clients’ payments to advisors. They prefer, even if they have to pay a premium, paying an advisor on an automated monthly basis rather than a lump-sum annual payment, he says. That’s not entirely a rational choice but it is one that millennials make and that advisors can easily meet.

— Miriam Rozen