Catering to next generation clients

September 21, 2016 by Brady Field

A young couple in a coffee shop looking at a tablet at their finances. These next generation clients are looking for a good digital experience with an advisor.

About the author

Brady Field

Account executive

Brady's focus is on empowering advisors to drive productivity and profitability with Advicent's tools, strategies, and resources. He is a graduate of the University of St. Thomas and was a member of the 2009 DIII National Championship Baseball Team. Prior to working at Advicent, he worked in the digital marketing space with companies of all sizes.

The next generation of financial planning clients are commonly overlooked by today's advisors. Many clients under 40 are pulled and stretched in a number of different ways for financial advice due to all of the options our digital world provides to manage finances.

With the expanded digital landscape, there are a vast number of robo-advice platforms, personal financial management (PFM) solutions, and DIY investing options that are now on a level playing field. So how does an advisor who has been concentrating on retirees and high-net-worth clients shift focus to the next generation of planning clients and why?

Why should advisors target younger investors?

Let us start with the “why.” There are some valid reasons why younger generations may be difficult with which to work. The vast majority do not have the assets available to turn a profit, they have shorter attention spans, and demand a constant high level of service – which is why many young investors are finding value in robo-advice platforms.

There are minimal barriers to entry, forgiving fees, and easy access. These DIY platforms are viable solutions now, but what about further down the road? Financial advisors will never go away, but those who plan on remaining in the industry should be courting these potential clients.

There will come a time when there is a shift of wealth from the highly-targeted Baby Boomer generation to their children. In an advisory role, those that have a relationship with the parents as well as the kids greatly diminish the chance of losing the family assets when the parents eventually pass away.

An additional benefit of having a diversified client base could be seen during a valuation of your book of business. It is easier to see the potential growth if there are future years of revenue accounted for.

How can advisors begin to attract these next generation clients?

Now let us look to the “how.” There seems to be a lot of fear in our industry when robo-advice is mentioned. How much of the market share are they capable of taking?

If you take a look at the value proposition of many web-based platforms that offer financial advice, you will see they are offering 24/7 access to accounts while offering to manage the funds of a client at decreased fees compared to traditional AUM models. It is fairly easy to determine what younger clients are looking for when it comes to a digital experience with their finances, but many advisors are struggling to court younger clients in our increasingly digital world.

An advisor must offer the value of a web-based platform while still being available for personal (face-to-face) consultation. Simple accessibility is the most valuable resource for the next generation, and it is a major aspect that is missing from robo-advice, PFM, and DIY solutions.

Advisors who are able to figure out a pricing model that competes directly with robo-advice will have the opportunity to work with the next generation clients. Advisors who offer enough personalized value will have life-long clients.

Many advisors may think, “Portals and PFM tools do not offer enough value to my current clients.” This may be true for some of your client base, but what about the next round of clients or even your older clients who are also looking for their client-advisor relationship to become more digital.

Clients are expecting the digital experience that is offered through client portals, and the advisors who are able to meet the demands of these clients will set themselves up for success for many years to come.