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Practice Management > Building Your Business

5 Ways Advisors Can Add Next-Gen Clients, Grow Assets

By Anand Sekhar

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An enormous generational wealth transfer is underway. The financial advisors who prepare should benefit, but those who don’t could see the value of their business decline.

Recent research by Fidelity Investments shows 57% of existing client assets will pass on to younger individuals by 2045, and firms with clients that have a higher average age will be particularly exposed to this anticipated transfer of assets.

A recent Cerulli report even found that more than 70% of heirs are likely to fire or change financial advisors after inheriting their parents’ wealth. But with these warning signs comes a great opportunity.

Young investors are becoming more interested than ever in working with financial professionals. They value and are willing to pay for professional advice, are motivated to improve their finances, prefer to consolidate assets with a primary advisor, and are loyal clients.

In the past year, millennials and Gen Z referred their advisors three times more than their Baby Boomer counterparts, and two-thirds of millennials and Gen Z want to consolidate more of their assets with their primary financial advisor in contrast with 19% of Baby Boomers, according to Fidelity research.

Amidst this changing financial landscape, it is time for advisors to ask themselves: are they ready to engage with millennial and Gen Z investors?

5 Unique Needs to Fill 

Success in attracting younger clients might not happen by using the old reliable playbook that worked with previous generations. Millennials and Gen Z have different world views and unique life experiences, and they are not a monolithic group either.

They might need a different approach when it comes to financial planning, so the question is: “How can we better S.E.R.V.E. young investors?”

Support: Young investors desire collaboration. They don’t want to delegate their finances to an advisor and walk away. This means a financial advisor who can build a supportive partnership through timely education and transparency will stand out. 

Engage: Young investors want more hands-on guidance. They seek responsiveness and accountability to help them stay on track. An advisor who can act as a behavioral coach has the edge. 

Relate: Young investors want an advisor who is relatable to them, and diversity is a critical part of this. For business leaders, this can be achieved by diversifying their team of advisors to serve this new generation that is significantly more diverse.

Value: Planning for traditional retirement may not be what young investors are prioritizing the most. Addressing their top goals will be key to delivering value to them, and they’ll choose an advisor who understands the nuance between early retirement and financial freedom.

Additionally, helping to find tangible ways to tackle goals such as paying down student debt or buying a home allows advisors to connect and problem-solve with their clients.

Educate: Lastly, young investors are witnessing innovation at a staggering pace and need a guide to navigate different investment ideas and products. An advisor can teach them, as younger clients seek more information on innovative investment ideas such as cryptocurrencies and ESG.

Other Steps to Take 

For advisors who seek to delve into this emerging market and position their businesses for long-term success, there are several steps that can be taken. 

Start at the beginning and define an appropriate target client.

To ensure advisors are on the right path for their firm, they should first create an ideal young client profile that fits their business strategy. Consider characteristics such as savings habits, inheritance potential, future earning potential, and demand for service. 

Engage with the children of current clients.

The young investors that advisors need could simply be their clients’ grown children. Fidelity’s research shows that advisors have reached out to only 13% of clients’ children.

By providing a second opinion on their financial situation or offering to be a resource as they navigate a particular life event, advisors can open the door to new relationships with their clients’ adult children. 

Educate clients and prospects.

Whether in person or online, providing financial education that demonstrates an individualized approach and your understanding of planning for financial independence might be just the thing.

Go digital.

Millennials and Gen Z rely on social media for research and advice much more than previous generations. Increasing your presence on social media platforms with educational tools and advice could be key to reaching the right audience. 

Younger investors are actively seeking tailored financial advice. If firms cannot meet their unique needs, they will find someone who can — and take their wealth with them.

Anand Sekhar is vice president of Practice Management & Consulting, Fidelity Institutional, which  provides clearing, custody, or other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC.

(Image: Adobe Stock)

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