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.”
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?”
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.”
“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.”
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.”