The RIA industry is fast approaching a changing of the guard, and not just in its workforce (the average age of financial advisors today is somewhere in the mid-50s) but in its client base as well. RIA firms that have spent the last decade serving the baby boomers are now faced with the challenge of attracting the next generation of clients, and they are nothing like their parents.
What’s an RIA to do? In my firm, we are addressing the issue by holding an off-site company event dedicated to a bridge-the-generation game plan for building and serving the next generation of clients. On the agenda: identifying next-gen clients, looking at how they want to work with a financial advisor and what services are valuable to them, and then creating an effective and profitable business model to serve them.
Step 1: Identifying Next-Gen Clients
The first step to attracting new clients is to begin identifying them. The Gen X (post-World War II baby boom) and Y (also known as the Millennial Generation) demographic is wide-ranging in cultural and religious background, economic status, education and ethnicity. From that population, potential clients typically fit a profile of being in their mid-20s to early 50s, with a college education, 100K+ a year in annual income and up to $2 million or more in assets.
A trend with Next-Gen clients is that they have an entrepreneurial spirit (many of them own businesses), and unlike their parents before them, they use technology to manage many aspects of their lives. There is also an increase in women-driven and minority households. While the demographics of these prospective clients are important, what’s more compelling is their psychographics. In other words, it’s not about an age, it’s about an attitude where maximizing their profit and purpose is of equal importance.
Step 2: Understanding Next-Gens’ Financial Goals