Ready to Take on Next Gen Clients? A Robosaving Strategy May Be the Key

A lot of advisors talk about the desire to bring on next-generation clients. What’s fascinating is that the discussion almost always focuses on how to manage the relationship after a parent dies. Investment News recently reported that 66% of adult children fire their parents’ advisor after receiving an inheritance. And while that statistic does illustrate the problem, when it comes to attracting Millennials in the first place, it may be best to begin where this younger generation is at the moment: at the beginning.

The fact is, few Millennials have significant assets to invest—yet. Although the oldest of the group are busy celebrating their 35 th birthdays, 26% of Millennials are still living with their parents according to Pew Research Center . The reasons are many, from a highly competitive job market to unprecedented student debt. Regardless, what Millennials need now is help accumulating enough assets to not only move out of Mom’s basement, but to start investing in their futures. By filling that need, you can provide a much-needed service to the next generation and assist your existing clients by helping their kids gain stronger financial footing. Ultimately, you’ll earn the business of tomorrow’s breadwinners—even before they inherit Mom and Dad’s wealth.

One way to tackle this objective is to build a new service offering that leverages Robo technology and helps Millennials start saving for the future. Whether you revere or detest them, Robo platforms are proving their worth as a low-cost alternative to comprehensive investment management. And while some advisors may still view Robos as a threat, those who are combining human intelligence with the latest technology platforms are already finding an edge. Using them to help Millennials start a serious savings plan can be a great first step.

Saving begins with spending visibility

It’s amazing what a little visibility will do to open people’s eyes to how much they spend—and on what. I’m a long-time disciple of Quicken . It’s the best tool I know to track and analyze spending, and I vividly remember the first time I rolled up the numbers to see how much my wife and I were spending on eating out. It was stunning. And while it hasn’t stopped us from occasionally going out for a good dinner, it has made us think twice when we’re considering a splurge. For Millennials, that type of insight can be a life-changing wake up call.

Picture this: Tim is 28 and still sleeping in his boyhood bedroom, complete with Nickelback posters and his high school yearbook on the shelf. He wants to get out on his own, but he also knows he’s sitting on $25K in student loan debt. After working as an unpaid intern for two years after college, he’s finally working full time, but he’s only pulling in $35K a year. After health insurance, car insurance, taxes, and his student loan payments, he feels like he can barely make ends meet—and that’s without the burden of rent or a mortgage. Forget about contributing to his company’s 401(k). The future is a long way off.

When you sit down with Tim’s (very frustrated) parents for their annual review, his situation is one of the first things on their minds. Luckily, you have the ideal solution at the ready. You invite Tim to come in for a 30-minute meeting to talk about improving his finances. All he needs to bring with him is a record of his spending over the past two months.


Once he’s there, you show him how to use Quicken (or one of several other good tools out there), including how to set up spending alerts that are delivered straight to his mobile device, as well as automated bank reconciliation and easy-to-use reporting tools. When Tim sees how easily these tools work with popular apps like PayPal, Venmo, and his bank’s mobile banking app, he’s thrilled.


Next you upload Tim’s financial information on the spot and run a quick report. The graphic Tim sees next blows him away. Because here’s the thing about Millennials like him: they’re averse to owning things, they value convenience (sometimes above all), and they’re susceptible to an aggressive marketing revolution that targets them where they spend most of their time: online. It’s a costly reality.

In fact, if Tim is like most people his age, his top expenditure isn’t his student loan payment, and the monthly costs of his stay-at-home lifestyle aren’t so cost-effective after all. Restaurants dominate his spending, including everything from fast food to high-end “date” restaurants to a good number of $7 pints with his buddies. Uber, cell phone, and Starbucks all top the $100/month mark. And new technology is a given—from the iWatch to a bigger, better gaming computer. At a bird’s-eye-view, even Tim can see that his financial habits are quickly sucking his independence out of him.

Tim may not have his financial ducks in a row, but when he sees the numbers, he knows things need to change. So you offer a low-cost service that includes some basic goal setting, creating a simple budget, and a quarterly review of his spending to help him stay on track. His job is to continuously update the app and work toward his budget. Your job is to encourage Tim to save as much as he can now, and continue to provide financial education so he knows how to leverage his savings when he has accumulated enough to start investing.

In a year, you’ll likely have a much more confident Next Gen client with a bit of savings in the bank. In five years, you’ll likely have Tim as an investment planning client with limited but growing assets. In 15 years, Tim and his fellow Millennials will likely be the core of your practice—and his parents’ assets are almost certain to rem ain a valuable piece of your book of business. All with just a little help from a Robo app…and a smart, low-cost customer acquisition strategy of helping Millennials build their wealth from the ground up.