CHICAGO Jan 6 They don't care where you went to
school or what certificates hang on your wall. But once you win
them over, wealthy young clients may be your biggest advocates
and your best customers.
Financial industry professionals say Generation Y clients -
the "millennials" born after 1982 - can be tough nuts to crack.
Connecting with them requires a willingness to abandon the
tried-and-true formulas that worked for baby boomers who wanted
investment strategies spelled out for them. Instead, you must be
willing to try to solve many of their financial problems, beyond
investing, and you have to bring them into the process more
"What they care about is if you're going to bring them some
clarity - and be a partner and resource to them forever," says
Mitch Reiner, a 32-year-old financial adviser in Atlanta who is
part of a team managing total assets of nearly $1.4 billion.
SWEAT THE SMALL STUFF
Among millionaires in the Gen X and Gen Y age group - which
stretches back to people born after 1965 - 61 percent are likely
to perform their own investment research, according to a 2013
study by Fidelity Investments. Only 6 percent of high-net-worth
investors in that group delegate their financial decisions to an
adviser, compared with 20 percent of baby boomers.
So how can financial advisers win over these well-informed
do-it-yourselfers? One way is by overseeing as many details of
their financial lives as possible, says Jylanne Dunn, senior
vice president for practice management for Fidelity.
Fidelity's research on younger clients found an
overwhelming desire to use advisers who can serve as a
one-stop-shop for their comprehensive financial needs, not just
planning. Younger clients look for advisers who can offer
expertise and referrals on everything from insurance to estate
planning. At the same time, they wanted to collaborate
throughout the process.
"You're going to have to let them drive the pace at which
the conversations will go," Dunn says. "Don't try to put them in
the same box as the boomers."
EXPECT THE TEXT
Because Gen Yers exert more control over their portfolios,
they demand faster response times, Dunn adds.
"They want to be able to text you when they have a question
and get a response back," she says.
It helps to match younger clients with advisers who can
directly relate to their life experiences. At the least, invite
an adviser in the client's age bracket to be part of the service
team, says Jennifer Geoghegan, a practice management expert with
Focus Financial Partners, a nationwide group of independent
"In their day-to-day interactions, they will probably want
to interact with the younger advisers who are closer to their
life stage," she says.
To attract younger clients, Patricia Raskob, a longtime
Tucson-based financial adviser and grandmother of 10, has been
adding staff members in their 30s. Since September, she's also
enlisted the services of a social media expert to write blogs
and boost the firm's presence on LinkedIn. Younger prospects
seem to be tuning in, she says.
"We get calls, and we've been doing a lot of first
appointments at no charge," says Raskob, whose staff of 12
full-timers has about $155 million under management.
To be sure, when you're dealing with young clients who have
more modest nest eggs than early-stage millionaires, it may help
to ease the rules a bit, lifting criteria for minimum investment
or otherwise offering incentives that can lure the
budget-constrained to your door.
"I have very transparent hourly-based pricing," says Justin
Nichols, a financial planner in Manhattan, Kansas, who works
mainly with professionals in their 30s and 40s and advertises
that his first-time services that will be "less than your
monthly cable bill." "I think they like the idea of the
Nichols, like many advisers dealing with younger investors,
is also big on technology, meeting with more than 70 percent of
his clients virtually with the help of cloud-based tools.
Many times they come to him seeking validation of their own
financial decisions and ask questions like, "Are we on the right
track? Do we have enough insurance? Help me choose the right
investment for my 401(k)," he says.
NOT YOUR FATHER'S FUND
Younger investors may also have a different idea of what
constitutes an attractive investment opportunity than their
older counterparts, says Barbara Young of San Francisco-based
Cypress Wealth Advisors.
The passive, index-driven approach of exchange-traded funds,
for one, can be a turn-off to the young Silicon Valley investors
she caters to because many of them amassed their wealth from
tech startups. Instead, they want access to private stock
offerings on early-stage concepts with the potential for big
rewards. Young comes to meetings prepared to help assess the
risk associated with those ideas.
"They don't want to go into the big fund," says Young, whose
firm manages almost $1 billion. "They want private equity,
interesting deals they can understand."
Of course, there is no preset formula for dealing with any
age group. But with younger clients, there are some general
pitfalls to avoid. Whatever you do, don't patronize them, says
Focus Financial's Geoghegan.
"They don't want to be talked down to by their parents'
adviser," she says. "Just because they don't have the wealth
today doesn't mean they're not smart and motivated and willing
to learn." Nor does it mean they won't have wealth tomorrow.