Written by: Mark V. Petersen
You’ve heard the numbers: it costs 4 to 10 times more to acquire a new client than to retain an existing one. It’s why smart companies focus the bulk of their marketing and development efforts on current clients, and for companies like Starbucks, it’s been a strategy paved in gold.
But what about advisors? It’s an entirely different challenge when your existing clients are retirees in their late 70s, 80s, and even older. In this case, even the most brilliant marketing strategy won’t matter if client retention is the goal. This demographic is going to dwindle. Period.
So what’s the answer? How can you continue to grow your practice—without taking on 10 times the marketing cost? Take a cue from Starbucks and focus your efforts on today’s biggest demographic: the aging Millennial.
Today there are 75.8 million Baby Boomers in the US, and they’ve been a boon to business for decades. You know them well; they’re your friends, your colleagues, and the majority of your clients. And as the wealthiest generation in history, they’ve had money to spend—and invest. But while Boomers may have taken consumerism to new heights, Millennials have upped the ante, catapulting brands and dictating the winners since before they could talk (remember Barney?).
Here’s the great news: Millennials just surpassed Baby Boomers as the largest living generation in the US. And the oldest of this group are your prime prospects: they’re in their mid-30s and they’re ripe for financial help. Even better, they’re on deck to inherit the considerable wealth of your existing clients – Boomers will transfer an astounding $30 trillion to their heirs over the next several decades – so earning their business is all about retention, not prospecting.
But to leverage that opportunity, “business as usual” is not the answer. Millennials have a different view of the world, and to earn their trust in the future, you need to start thinking like them, acting like them, and delivering services that matter to them. Here are 5 steps to help make your practice as valuable to a Millennial as a Starbucks latte:
1. Get them in the room.
Don’t restrict your Boomer meetings to the Boomers. Invite older clients to meet, and ask them to bring along their adult kids. Focus your discussion on the big questions few families ask, but all families should address: Do you have enough saved to avoid outliving your assets? What about long term care? Does selling a life insurance policy or another financial strategy make sense to cover immediate expenses? Open up the conversation and get the family talking about the future to be sure the right plans are in place to protect the existing estate.
2. Keep the conversation going.
Once you’ve established a connection, don’t restrict your conversation to the needs of the older parent. Millennials are facing their own financial needs. They’re worrying about how to purchase a home, how to fund college for their kids, and how to start investing for their own retirement—which promises to exceed today’s typical length by a good decade. They have work to do, and you’re here to help.
3. Focus your marketing events on Millennials—not Boomers.
If you’ve done a good job for your Baby Boomer clients, marketing to them isn’t your biggest priority. Sure, have a wine tasting or a golf outing now and then, but it’s time to do some serious marketing aimed at the next generation. Host a workshop on purchasing a first home. Invite them to a high-end sporting event or concert. Schedule technology sessions to teach them how to use apps like Spending Tracker and Mint to help them budget and save better than ever. Earn their confidence now to earn their business later. (See Ready to Take on Next Gen Clients? A Robosaving Strategy May be the Key).
4. Protect their inheritance.
Now that you both know (hopefully) where their parents’ money is going, offer to help put a plan in place to protect that inheritance. Don’t assume they want to invest in the same way or you’ll risk losing their business. More than 80% of Millennials aren’t investing in the stock market. The reasons? They feel they don’t have enough money, they don’t know how to start, or they’re swimming in student debt. Target these items specifically and start working together to get them started on a smarter path.
5. Think—and look—like a Millennial.
No, you aren’t getting any younger, but even if you’ve got just the right amount of gray to instill confidence in your Boomer clients, their kids are looking for an advisor who understands who they are and what they value. Brighten up the office. Trade in the blue suit for a polo shirt and khakis. Present your materials on an iPad. Offer videoconferencing, free Wi-Fi, and Starbucks. Add Socially Responsible Investing (SRI) or “green” investing to your services. And bring in staff who can relate to the next generation and get them involved…ideally through Twitter, Facebook, and LinkedIn.
The best news: one of the great things about Millennials is that they’re not just the biggest generation to date, they’re also the most brand loyal. That means once you earn their business, you’ll very likely have them as a client for a very (very!) long time. Keep evolving as they do, and you may very well have a business model that supports your practice for your own next generation. It all starts with making client retention a top priority and keeping those Baby Boomer assets in your book of business for decades to come.
Mark Petersen has over 25 years of experience leading distribution and sales efforts in the financial services industry. His background includes managing retail and institutional securities sales as well as national accounts, and he has forged strong relationships with broker/dealers and financial advisors throughout his career. Currently Executive Vice President at GWG Holdings, Inc., Mr. Petersen is also a registered representative of Emerson Equity. His previous roles include co-president of Behringer Securities LP and executive sales and marketing positions with CNL Fund Management, Franklin Square Capital Partners, and Madison Harbor Capital. He holds an MBA in finance from Baylor University and a B.S. in business administration from the University of Texas at Arlington.
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