Whether it’s baby boomers, millennials, women, business owners or others, advisors are always getting tips for working with specific groups.
There’s certainly no dearth of advice, education and tips when it comes to working with millennials and Gen Z. Getting it right with these generations is pivotal to the future of advisory practices. Data confirm as much. As noted by FlexShares, millennials alone represent over 13 million U.S. households with a staggering $2 trillion in combined wealth.
That wealth figure is going to continue moving higher as more millennials advance in their careers and as the great wealth transfer takes shape. Both factors are applicable to Gen Z – the younger of these two demographic groups.
Important as those points are, there are other reasons why advisors should be working with younger clients and without delay. Notably, millennials and Gen Z aren’t as financially optimistic as previously believed. That’s not to say they’re overtly negative, but they have concerns and that spells potential opportunity for advisors.
Understanding Younger Clients’ Motivations, Views
In a recent episode of FlexShares’ Flexible Advisor Podcast, Ryan George, Chief Marketing Officer of Docupace, highlights issues such as younger clients’ views on investing, risk aversion and wealth utility as issues advisors should be aware of.
“Someone who is 25 years old, early in their financial life, has seen 9/11, followed relatively quickly by the Great Financial Crisis of 2008-2009, and then the COVID crisis,” notes George. “They have seen plenty of disruption, and as a result, I think there is an expectation of bumpiness in the markets that has made them risk averse. Having that risk conversation with an experienced financial advisor can really benefit them.”
He adds that younger clients view wealth as a tool. Sure, many are saving for homes, starting families and planning for college and retirement, but they also want to enjoy the fruits of their labors now. Point is, it’s not just OK for an advisors to tell a younger client to take a vacation or splurge on a show or sporting event. It’s appropriate and will likely be well-received by millennial and Gen Z clients.
Advisors should also remember another word that’s been making the rounds in the industry for awhile now: Holistic. When it comes to younger clients, it’s not just an overused buzzword.
“I think advisors need to think holistically and not be tied to traditional investment products. From an advisory standpoint, technology can help provide access to those solutions and integrate them into the investment strategy,” adds George.
Opportunities for Engaging Younger Clients
For advisors looking to better connect with younger clients, there are some obvious steps, including harnessing the potency of technology and preparing for the great wealth transfer.
Beyond those ideas, which many advisors are already implementing, focusing on educational efforts and female clients are strategies that could pay long-term dividends when it comes to attracting and retaining millennial and Gen Z clients.
“This is not just about hiring women advisors but serving women who are the breadwinners of their households. This is an area where I think the industry is still behind. I would love to see us get in front of it,” concludes George.
Related: Happy Clients, Happy Advisors. Avoid These Missteps.