Lowering the Boom: How to Bring In Gen X and Gen Y Clients

We hear a lot these days about what advisors have to do to attract Gen X and Gen Y clients, and for good reason. We baby boomers aren’t getting any younger, and many of us are rapidly moving out of our asset accumulation phase and into portfolio depletion. To grow, or even just tread water, most firms need to attract younger clients, which brings us back to the X’s and the Y’s. The problem—which is pretty clear to anyone who has spent more than 15 minutes with younger folks lately—is that they aren’t like us, in more ways than you can count. Reaching them requires not only a different way of communicating, but a different way of advising as well.

With a quick Google search, you’ll find plenty of folks willing to tell you all about the differences between Gen Xers (born between 1964 and 1982), the millennials (born between 1982 and 2002, so called because their leading edge started to come of age around the turn of the millennium) and baby boomers. But to uncover how those differences translate into advisory relationships, language strategist and author of “The Language of Trust: Selling Ideas in a World of Skeptics,” Mike Maslansky conducted a panel for 400 or so financial advisors in attendance at Peak Advisor Alliance’s Excell Meeting on Oct. 2 in Omaha, Neb. Prompted by Maslansky’s questioning, the differences between the seven affluent baby boomers and seven affluent Gen Xers and Yers on the panel became glaringly apparent, begging the question of whether many baby boom advisors will be willing or able to bridge this generation gap.

Before we get to their differences, there were a few points about which both generational groups agreed that are important for all advisors to hear. When it comes to hearing an advisor’s initial pitch, all the panelists were turned off by too much talk about the firm. As one panelist summed up the sentiment: “Tell me it’s about me. What are you going to do for me and why that’s important to me.”

Brevity is also greatly preferred when the initial pitch comes to talking about fees. All the panelists from both age groups agreed that the answers they heard to questions about fees were “too long winded.” “If the advisor doesn’t give a number pretty quick, it starts to sound as if they are trying to hide it,” said one panelist.

The panelists also liked the idea of having two advisors working directly with them, rather than just one, particularly if each had a different approach: say, one a quant and the other more touchy-feely, or a female and male advisor team, particularly with clients who are couples. But surprisingly to me and to the one-third of the advisors in the audience who offer them, none of the panelists liked “100% money-back guarantees” for things like planning fees. The group consensus was that it undermines the firm’s belief in the quality of its services. “Better to stay positive” was the prevailing feeling. “Say something like ‘We’ll work with you to make you happy.’”

Not surprisingly, peace of mind was a big issue for the baby boomers, but what was a surprise was that, despite their long-term focus, the retirees and near-retirees wanted their advisors to communicate with them about troubling current news, such as the recent government shutdown. They didn’t necessarily want a phone call—an email would do—but they wanted to know that their advisor was on top of it and what they were doing about it. Peak Advisory Alliance Managing Director Paul West told me: “The prevailing sentiment was ‘Just tell me that you’re watching out for me and my situation.’ Yet less than 2% of advisors in the audience had communicated with their clients over the shutdown.”

Current events were not as important to Gen X and Y, who generally felt that they could take on any additional risk that came with them. Instead, the younger folks were much more concerned about getting value from their advisors in today’s digital, do-it-yourself world. Responding to a couple of advisors’ service pitches, one panelist said: “I haven’t heard a message from an advisor that I couldn’t do myself. Their value propositions were bad. I can just get Vanguard small-cap funds. What is the advisor going to do for me that’s worth the cost?”