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Practice Management > Building Your Business

Cultivating clients: millennials

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There was no epiphany, no single event that told Tim Watters, CFP, it was time to pursue a more age-diverse client base. Rather, says Watters, who co-founded Paramus, New Jersey-based Watters Financial Services some 30 years ago, “the moments of clarity were many.”

The more Watters contemplated the long-term future of his wealth management and financial planning firm, the more he studied generational demographics, and the more requests he got from baby boomer clients to help their millennial children with their finances, the clearer it became to him that he needed to make his firm more appealing to younger clients.

“You have to stay relevant,” explains Watters, himself a 50-something boomer. “No matter how well you’re running your firm, assets are going to go out the door. That’s just a reality in this business. So if you don’t make the effort to build a bridge to your clients’ children and the younger generation, you’re going to lose the family. For us, the point of reaching out to younger clients is asset preservation and asset transfer. There’s power in being the sage counselor for the clan.”

Related: The $200B generation: Millennials reveal challenges & opportunities in insurance [infographic]

For Watters, staying relevant means not only updating the firm’s technology platform, its messaging and its service model to appeal more to millennials and Generation Xers, but hiring a younger advisor to serve them. So Watters began grooming his son, Colin, a 20-something millennial, for the job. “We want to have someone in the office they can relate to from an age standpoint. Colin has been reaching out to our older clients’ children to build awareness that they have a resource here,” Watters explains.

Colin Watters is working to earn a Certified Financial Planner designation in 2017 with an eye toward catering to Gen Xers and fellow millennials with a model that blends the traditional — personal, relationship-based advice — with automated tech tools like those available from the emerging breed of online robo-advisors. “I truly believe millennials like me want to look somebody in the eye and ask, ‘Am I okay [financially]?’” says Colin. “They still want to have an individual advisor. I don’t see that going away. I just don’t think the old wealth management model is going to work for a lot of people my age.”

The $30 trillion opportunity

For advisors such as Andrea Blackwelder, CFP, ChFC, who are accustomed to working primarily in the Boomer market, connecting with younger prospects and cultivating them as clients will require not only an adjustment in approach but also an investment of time and resources. “Our industry is trying to figure out how to best deliver services to a younger client, to meet them where they are,” says Blackwelder, who as founder and president of Wisdom Wealth Strategies in Denver, CO, serves mostly affluent clients in their 50s and 60s, though at 34, she’s a member of the millennial generation. “You have to move with the times, right?”

Social media

Millennials may prefer to interact differently than boomer clients, including through social media platforms. (Photo: iStock)

In Blackwelder’s case, the motivation to develop a younger clientele comes from older boomer clients wanting her to advise their children. The plan, she says, is to keep Wisdom Wealth Strategies on course while building out a separate segment of the practice that’s focused on younger, mostly 30-something clients. To that end, she’s spending more time interacting with a younger audience on social platforms like Twitter, while investing in a new website that’s entirely separate from her firm’s flagship site and geared to a younger audience. “The new website looks fresh, talks fast and is more casual and conversational,” she says.

Given the size of the millennial generation (about 80 million people, comparable in number to the Boomer generation) and the potential wealth in play, investments like that can pay huge long-term dividends for advisors who successfully adapt. Not only do millennials stand to inherit an estimated $30 trillion from their parents, they’re about to enter their peak earning years, Facebook IQ, the popular social network’s research arm, notes in a 2016 white paper, “millennials and Money: The Unfiltered Journey.”

Related: What advisors can learn from millennials’ dislike of banks

“We’re on the brink of the greatest wealth transfer in history, between baby boomers and younger generations,” observes advisor Brad Sherman, who at 36 straddles the boundary between Gen Xer and millennial. Three years ago Sherman founded Sherman Wealth Management, a millennial and Gen X-focused firm in Gaithersburg, MD. Today the firm has close to 100 clients, he says, 70 percent of whom are under the age of 40 and 25 percent of whom are in their 20s.

Beyond the obvious wealth potential of the younger generations, Sherman says his impetus for starting the firm was to give 20-, 30- and 40-somethings an alternative to the old-school wealth management approach. “I built the company around the idea of delivering a better experience than the one I had, and that friends and family who are around my age had, with advisors who we couldn’t relate to, and who couldn’t relate to us.”

Blended model

As is the case with the Watters, Sherman says he is seeking to position his firm “in the middle ground between the robo advisors and the traditional firms, by offering the full in-person experience plus all the virtual tools that people my age expect.”

Investing in a “robust technology backbone” was among Sherman’s top strategic priorities in launching his firm. That includes a proprietary mobile-enabled website and app for clients to securely view and manage accounts, online scheduling and virtual conferencing capabilities via apps such as Google Hangouts, along with digital signature and document upload and download capabilities.

Younger clients today demand an omni-channel advisory experience. “You have to make it easier for them to access services and get information into their hands,” observes Blackwelder. “You’re delivering essentially the same services, you’re just delivering them differently.”

Engaging younger clients isn’t the only impetus for tech investments like these, notes Tim Watters. “It’s about technology driving efficiency. That’s another reason we’re moving systems to the cloud.”

New tech tools are integral to creating a more millennial-friendly service model, according to Marguerita Cheng, CFP, who heads Blue Ocean Global Wealth in Rockville, Maryland. “If you’re trying to work with younger clients, the AUM model may not be appropriate,” says Cheng. “You may have to find another way, whether that’s charging an hourly fee, an annual retainer or a monthly subscription fee.”


Building a generationally diverse, segmented practice where millennials, Gen X and boomers all feel comfortable increases an advisor’s value. (Photo: iStock)

Working with younger clients also puts advisors in more of an educator’s role, notes Cheng. “I find that a lot of millennials don’t have a good foundation of financial literacy. They’re not necessarily money-savvy, so education is really important.”

Besides a separate website and different fee structure, Blackwelder says she is gearing up to focus on issues relevant to younger clients. “My expectation is that this will be more consulting work in areas like budgeting, spending habits, 401(k)s, and managing college debt.”

Rather than competing with robo advisor, Blackwelder says her goal is to attract younger clients who want higher-touch, personalized service along with more tech tools. “People are going to go the robo route, and that’s okay. But if a relationship with an advisor isn’t important to them, then I’m probably not the right advisor for them.”

Getting the message out

For advisors accustomed to working in the boomer market, gaining a foothold with younger clients also likely will require an adjustment in messaging. Later this year, Watters’s firm plans to launch a revamped website that speaks more to a multigenerational audience, with short video segments involving the younger Watters, along with additional account monitoring and trading tools for clients.

Reaching a younger audience means getting the message out about you and your skills through their preferred channels for information-gathering and making connections: the Web and social platforms. For Sherman, that means blogging and consistently posting to social sites. “It’s a way for us to get ‘shared’ by current clients, and for people to understand how we view and approach things.”

“Getting your content online and out there by writing articles, blogging and answering questions is how you reach them,” adds Cheng. “You want to share relatable stories and show your expertise, and you want to show that you honor and respect where they are in life. It’s important that you’re authentic and don’t disrespect them just because they’re young and haven’t accumulated a lot of assets yet.”

In the end, Cheng says the idea of building a generationally diverse, segmented practice where millennials and Gen Xers feel equally at home as baby boomer holds great appeal. “If you do a really good job with younger clients, you can build a practice within a practice. That helps with continuity and retaining assets.”

“Nothing ventured, nothing gained,” Blackwelder says of her pending move to diversify. “I hope the 20- and 30-somethings with multiple millions are looking for someone like me, because I’m looking for someone like them!”

See also:

6 ways to market life insurance to millennials

What millennials want from work and life

Millennials: The debt-averse, insurance-buying generation

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