Understanding millennials is key to retaining their assets during the Great Wealth Transfer
These 7 steps will help you drive client and asset retention, as well as organic business growth.
Baby boomers, the wealthiest generation in history, are quickly aging. There are an estimated 73 million baby boomers in the US, making them the second-largest age group after their children (millennials), born between 1982 to 2000. By 2030, it is estimated that all boomers will be at least 65 years old. As a result, an estimated $68 trillion will be passed from boomers to millennials over the next three decades, making it the largest transfer of wealth in history.
Most studies suggest that 80% or more of millennials will look for a new financial advisor after inheriting their parents’ wealth. While the stakes are incredibly high, there’s good news. As advisors, you are in a truly unique position to oversee the complexities of the great wealth transfer and ensure that clients and their families are prepared. This will require an inordinate amount of planning, important discussions, and a lot of due diligence. These seven steps will help you drive client and asset retention, as well as organic business growth.
1. Refine your offering. Depending on your current service offering, you may not be set up to successfully service the entry-level investor. Understand that this is not a one-size-fits-all model and may require some tweaking.
If you haven’t already, it’s essential to evaluate your current client base so you can segment and tier your clients. Once you have those tiers, you can further define what offerings each tier receives. For example, entry-level investors may get access to their online retirement portal and an annual meeting with a junior advisor, while larger investors may receive quarterly meetings and statements.
2. Understand what’s important to millennials. While it’s true that millennials love technology and spend most of their day in front of a screen, they are also driven by social issues and eager to make change for the greater good. They want to put their dollars where their values are, and impact investing is on top of mind. A 2019 study conducted by Fidelity Charitable found that 77% of millennials have made an impact investment, but only 53% of advisors truly understand the concept.
Millennials want to know that their contribution is making a positive impact, which means it’s more important than ever for you to understand and speak with your clients about environmental, social, and corporate governance (ESG) and socially responsible investing (SRI). Millennials are also open to investing in new mediums, like bitcoin. While you don’t need to be an expert, make sure that you’re staying current on what’s trending so you can advise your clients accordingly.
3. Leverage technology. In order to successfully scale and service entry-level clients, you’ll need to effectively use new technology. Millennials depend on technology to keep them connected and efficient in every aspect of their lives. In-person meetings and paper statements simply do not cut it anymore. While these methods may still work for some clients, millennials expect 24/7 access to an account portal, the ability to handle everything online, and the ability to talk to someone quickly and easily when they need to.
4. Look the part. While this doesn’t necessarily mean growing a beard and donning a beanie (see: hipster), it does mean that you should hire people that younger clients can relate to. We already know that clients want to work with advisors who understand their current situations, and they feel more comfortable with people who understand them. It might be worth investing in some junior-level talent to train. Once they’re up to speed, they can join you in client meetings, so they can get on the job training and your clients and their children can get to know your expanded team.
5. Have a strong online presence. This is an important one for millennials. Most don’t make a single purchase without conducting due diligence, and if they’re going to be keeping their newly retained assets with you, they’ll want to check you out.
Make sure your website is current and up to date. Dedicate some time and energy to your social media presence, and perhaps consider investing in marketing or public relations efforts to boost your brand. If you’re creating online content, it should be short and compelling. Videos and podcasts are other popular mediums, but just remember that traditional rules of compliance still apply.
6. Be authentic. Be true to yourself, your brand, and your mission. If you have been volunteering at your local food bank for years, keep doing it! Feel free to also mention it on your website, social media, or in your marketing collateral. But on the other hand, if you just start doing something because it seems “cool,” just know that jumping on the bandwagon is a big turnoff for millennials.
7. Be proactive. Now is not the time to be shy! Ask your clients to set up meetings with their children for a few reasons. First, you’ll get the opportunity to introduce yourself and explain what you do for their parents. This is the ideal opportunity to begin forging a meaningful relationship.
While this introduction is not an immediate sale, your effort will go a long way, and you may be their first call when they are ready to hire an advisor. Moving forward, you may consider involving your clients’ children in regular annual meetings to increase face time.
My biggest takeaway is to truly understand what makes millennials tick, and by doing so, genuinely connect with them on a deeper level. Once you do that, you can adapt to their unique evolving needs and interests. While we are facing unprecedented times, advisors have never been more relevant and valued then they are today. As long as you are prepared, you will be well-positioned to build a prosperous and long-lasting relationship with your clients’ children, retaining the legacy for years to come.
