We know RIAs need to attract younger advisors to stay in business as older advisors retire, but considering how much wealth will be transferred to millennials over the next couple of decades, what strategies should RIAs use to attract younger investors, too?
The good news, according to Jill Jacques, vice president and wealth management/retirement lead at North Highland, a consulting firm, is that millennials tend to work with older advisors because are looking for someone with experience and also because they often get a referral through their parents.
When they do work with younger advisors, they expect them to stay up-to-date on the latest trends or to work on teams with more experienced advisors.
“Advisors who have the parents of a millennial [as clients], it’s a very good inroad to have the millennials be involved as a family,” Jacques said. “Millennials are going to their parents. Parents want their millennial children to learn about finances. For advisors, that’s a great sign that you can start to form an intergenerational relationship.”
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Jacques pointed out that most millennials don’t have enough assets of their own to qualify at a lot of firms. “Looking at the household, you can broaden who you see as a client versus just the assets under management you can bring in house.”
Advisors who want to hold onto younger clients, though, are going to have to change. “Traditional advisors who have created a successful practice offer some outdated processes and approaches that aren’t going to translate to millennials,” Jacques said.
One such process is how they delineate between in-person meetings and phone calls. Jacques suggested advisors may have to change the mix of what information goes online and what is covered in a face-to-face meeting. “For millennials, they want to go face-to-face when there’s an important decision to be made, but they do not want to go face-to-face if it’s just information gathering. That’s where digital really plays a part.”
Presenting information is another challenge for advisors who want to attract millennial clients. “A lot of times there are 50-page documents with charts and graphs and numbers. What millennials are looking for is more of an executive summary, with more of an infographic feel. The more the advisor can paint the picture of what’s going on, rather than giving a 20-page dissertation about what’s going on, that will ring true more for the millennials.”
It’s also important to frame investments based on what they do for the millennial client rather than what they cost. Instead of talking about a “1 percent wrap fee or a certain percentage commission, it’s more the value they’re getting out of it,” Jacques said. “I know we have to disclose fees for compliance reasons, but that’s not something necessarily to dwell on.” Millennials care about how an investment can get them to their goals, Jacques said.