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March 22, 2017 at 12:50 AM
Saving is always in style and it’s never more fashionable than with younger consumers. Millennials have gotten a bad rep as being cheap. It’s true that they are generally a frugal lot who love a good discount. But it turns out that the under-40 set—that would be Millennials and younger Gen Xers—are very willing to pay for financial guidance. A Cerulli study last year found that 79% of households aged 30-39 said they agreed with the statement, ‘I am willing to pay for advice,’ while 73% of households under age 30 felt the same way.
If you consider their willingness to pay for advice, along with their penchant for savings and long-term wealth accumulation potential, it is hard to imagine why financial advisors wouldn’t want to snag more young clients. Many advisors I know are leaving the younger clients to their junior advisors (which is a great idea). If you don’t have the first-hand perspective of an under 40-something in your office, the following tips will help you craft your own Millennial-winning marketing approach.
Tip #1: Create a “Wealth Builders” Program
If you have been in the business for a while, you’ve gotten advice to increase your minimums. You still should have a stringent ideal client profile that includes assets at a threshold that is most profitable for you. But if you want to capture new long-term assets in to your practice, you may need to allow for a ‘growth’ level, with a lower asset threshold.
Financial advisors marketing to Millennials often target those with relatively high incomes (low six figures-plus), but fewer investable assets than their typical older client. This means you need to build a bridge to that next level of so-called HENRYs (High Earners Not Rich Yet), helping these young clients manage their finances and grow their investment accounts.
When planning and executing these programs:
- Be creative in naming, but stay on-brand.
- Make them feel exclusive and important.
- Require members to meet criteria or milestones (many advisors ask their younger clients to commit to specific savings goals).
- Encourage growth with Millennial-friendly incentives (e.g. savings, perks, and/or recognition).
Also, don’t forget to make budgeting help part of your value prop for younger investors. It’s a common need for this audience and should be a key component of your service offering within your “builder” program. (Investment Advisor’s Psychology of Advice columnist Olivia Mellan suggests you call budgets ‘spending plans’ to help dispel many people’s distaste for the word ‘budget.’)
Tip #2: Price Like Netflix
Millennials dislike large dollar commitments. There’s an obvious allure in paying smaller fees over time rather than large lump sums up front. If you’re already running an advisory practice that levies a monthly fee assessment, then you’re well positioned to communicate your pricing in this way.
If you’ve reduced your minimum account sizes such that assessing an advisory fee doesn’t make sense (profit-wise and/or for the client’s particular situation), then consider how you may charge project-based or flat fees, but take those fees out in installments. Lastly, look at tiered pricing (e.g, in advisory models where the AUM fee percentage is reduced as assets grow).
Tip #3: Deliver Like a Subscription Box
