Walking the Client Demographic Tightrope

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There are moments throughout my day as a financial adviser when I feel like a tightrope walker performing a delicate balancing act.

On one side, I have my baby boomer clientele who expect a high level of personalized service, one-on-one meetings, retirement planning advice and general counsel whenever it comes time to make an investment decision.

I’m comfortable working with these clients, who I’ve primarily served throughout my 28 years in financial planning. This demographic has also had a lifetime to build up investable assets and possesses a willingness and ability to compensate their adviser.

On the other side, I know I have to start catering my services to a younger clientele if I want to be in business 20 years from now. However, this demographic comes with an entirely different set of demands and expectations. For the most part, they’re less interested in face-to-face meetings, they are just starting out in their careers and possess minimal investable funds and they are quick to do their own research and make their own decisions. This is where the balancing act comes into play.

Advisers today are stuck between a rock and a hard place. They’re comfortable serving their baby boomer clients, who also happen to be much more profitable than their younger counterparts. Yet over the next several decades, this generation is going to transfer more than $30 trillion in assets to their children, and our industry must begin to pivot our services in favor of a younger clientele if we wish to survive. However, while we know this demographic is the future, they do not exactly represent a profitable business opportunity today.

So what can we do? For starters, it’s important to remember that your career as a financial planner is a marathon, not a sprint. No one is advocating for you to completely revamp your business and cater exclusively to millennials. But here are a few steps every adviser should consider as they begin to reposition their practice for the great wealth transfer.

  1. Hire younger advisers with the wherewithal to understand and utilize the electronic forms of communication favored by Gen X and millennial investors today. These younger advisers not only bring a fresh perspective to your approach to financial planning, but will be able to counsel more senior advisers on new communication tools enabled by technology.
  2. Consider charging younger clients in a different fashion by utilizing consulting or hourly fees and establishing small account offerings with lower fee arrangements. Millennials specifically are not accustomed to paying a 1 percent management fee like your older clients, nor do they possess the level of investable assets to make this fee meaningful for the adviser. Get creative in your compensation structure, and find a way that serves both parties’ best interests.
  3. Partner with a broker/dealer that offer investments products with low minimums. These broker/dealer partners can also counsel your team on how to best put these products into the hands of your younger clients.

At the end of the day, the long-term financial needs of Gen X-ers and millennials are very similar to those of their parents, and in many ways the actual planning process will largely remain the same. However, reaching and interacting with this demographic will require a much different approach. Hang on to that balancing pole and continue to walk the tightrope. It will pay off in the end.

Beth Richardson
Beth A Richardson, CFP®, is a financial adviser at Maleta Wealth Management, a Kestra Financial-affiliated firm. She specializes in wealth management, concentrating in retirement and estate planning for senior corporate executives and high net worth individuals. 

2 thoughts on “Walking the Client Demographic Tightrope

  1. Pingback: Five Little Things for Your Monday: October 16, 2017 – Twenty Over Ten

  2. Pingback: For financial advisers, serving different generations c… – Finance News

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