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Practice Management

Approaches that worked in the past won’t cut it any longer. What boomers seek in an advisory relationship isn’t what their children value.

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

Building a business that can retain and increase its value for the next generation means appealing to the children of clients and attracting younger investors.

But creating a successful legacy business is more challenging than ever because there are unprecedented differences between baby boomers and millennials.

The problem is that marketing approaches that worked in the past won’t cut it any longer. What boomers seek in an advisory relationship isn’t what their children value.

Those with millennial children can appreciate the vast differences between this technology-savvy group and their parents. Appealing to the children of clients means learning to speak their language.

As one millennial parent recently said, “Our children speak Internet, and we speak it with an accent.”

Key traits of the boomer generation include valuing experience over education, strong loyalty and expecting consistent hard work to produce results. Unlike their parents, millennials are achievement- not work-oriented; they value collaboration facilitated by asking a lot of questions, and they expect relevant information to be communicated quickly with the use of technology.

The traditional advisory relationship consisting of in-person meetings, paper forms and phone calls doesn’t appeal to millennials. The next generation of wealth holders expects communication through email and text messages, paperless forms and statements, as well as what may seem like an expectation of light-speed responses to their questions.

Craig Martin, director of financial services at J.D. Power, agrees that the average advisor who is used to working with boomer clients will face challenges when taking traditional marketing approaches with millennials.

“The younger investor has different expectations and desires,” he says. “The millennial investor wants to know where the value is in the relationship. Advisors tend to go right to the numbers, but the standpoint young investors are looking for is guidance, education and interpretation,” Martin says.

Listening and communicating effectively have always been important skills for financial advisors, but in this more collaborative environment, it has become a requirement. Millennials want to be coached, understood, and educated by their advisors through a continuing digital conversation.

It may seem daunting, but standing out from other experienced advisors to appeal to millennials is just a matter of changing a few habits and catering to their expectations. With so much wealth changing hands now and in the near future, it pays for advisors to learn to speak the millennial language and market their legacy businesses to the next generation.

Here are a few ways to adapt marketing efforts to millennial clients:

Get the technology together. Do whatever it takes to be in the forefront of technology. An advisor's website, social-media presence, presentations and ability to communicate in ways that work for younger clients will make all the difference in building trust and credibility with millennials.

Ask clients about their expectations. It is surprising how few advisors really do this. In the initial interview, try to understand how the client likes to do business and make adjustments accordingly. How often do they expect to meet in person? How often would they like to speak by phone? Do they prefer instead to text or email? If they leave a message, how soon do they expect a return call? The advisor’s willingness to listen will go a long way toward bridging a perceived generational gap.

Establish a client advisory board. Millennials expect a continuing dialogue and are comfortable giving their feedback. A few times a year, hold a lunch with a select group of clients to talk about the market and ask for suggestions to better serve your clientele. Publish photos of the event and the insights gained to your website. One interesting approach might be to include a few parent/child teams on the firm’s board.

Times are changing quickly, but while some advisors will fall prey to new challenges, it is important to adapt and seize great opportunities.

One recent study went so far as to coin a new term, “Gen D.” The term refers to digitally savvy consumers across all demographics who regularly use the Internet, mobile devices and other digital tools to research and make decisions.

Gen D consists of 75 million people who control more than $27 trillion in assets.

An advisor’s legacy business depends on making a strong connection with this group in order to build the practice.

-- By Craig Faulkner 

Craig Faulkner is president and chief executive of marketing firm FMG Suite.

 

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