Gui Costin Gui Costin.

What’s critical to grasp when serving millennial clients? They prefer texting to talking, deem phone calls and eye-to-eye meetings inefficient and would sooner watch videos than read all about it. Upshot? Traditional ways of communicating won’t cut it with this important new generation, set to inherit, along with Gen Xers, about $30 trillion in the next 30 years or so.

Hence, smart FAs need to start adapting to millennial habits and buying preferences, which are 180 degrees from the prior two generations. So says Gui Costin, founder and CEO of Dakota Holdings, a sales and marketing business for investment firms.

Costin, 52, is author of “Millennials Are Not Aliens … But They are 80 Million Americans Who are Changing How We Buy, Sell, Vacation, Invest, and Just About Everything Else” (ForbesBooks 2019).

In the interview, he elaborates on five key ways to build relationships with millennials, aka Generation Y:

  1. Communicate with them on their own terms.
  2. Be an advisor, not a dictator.
  3. Create content around your products.
  4. Use video to create rapport.
  5. Help them invest in solutions to meet their vision.

The first generation to grow up with the internet, millennials are habituated to getting quick access to information and products. That, in turn, has made efficiency and high-level service among their chief priorities.

Content is king to millennials, and the way they prefer to consume it is via video, according to Costin. Advisors should start creating it — and podcasts too — if they want to stay out in front, he recommends.

Though in the future, Gen Y will certainly seek guidance from FAs, they will also insist on involvement in investment decisions, Costin stresses. This is manifest with those millennials who already have substantial investable assets.

Dakota, founded in 2006, sells investments, such as mutual funds, to advisors through asset managers. The firm’s other enterprises are Stage Investor Network, a digital content platform where investment firms post content about their strategies, and Draft, designed for asset managers, which provides a database of investors.

ThinkAdvisor recently interviewed Costin, on the phone from his Bryn Mawr, Pennsylvania, office. Gen Y will become known as the Impact Generation, he forecasts, since these men and women want to invest in companies that will improve the world. Meanwhile, many are madly trading options and commodities on their phones. “It’s instant gratification — almost like gambling,” Costin says.

Here are highlights of our interview. The five key approaches to building relationships are in random order.

THINKADVISOR: You write that, because of the Great Recession, millennials are extremely wary of Wall Street. How should financial advisors try to build trust?

GUI COSTIN: You have to communicate with millennials on their own terms. They think and behave differently from baby boomers and Gen Xers. All you have to do is adapt to their habits and how they like to receive information: They prefer texting over talking, mobile over desktop, video over reading. That’s the exact opposite of how boomers and Gen Xers want to be communicated with.

What are the implications of those habits for financial services?

At some point, millennials are going to control the world’s net worth. They’re really close to the tipping point of inheriting about $30 trillion over the next 30 years. When they start running firms — like Morgan Stanley and Schwab — they’ll demand to get information delivered to [clients] the way they want it delivered themselves. Right now, it’s by hand and mouth — very antiquated.

Many people have the impression that millennials aren’t sociable because they prefer to communicate by texting rather than talking.

Not true. A 65-year-old financial advisor is thinking “You guys feel entitled. You don’t want to talk. You’re antisocial.” But millennials are totally social, as social as any other generation.

What do FAs need to do to accommodate their habits?

Advisors have been trained to call on the phone and meet face-to-face. Millennials are like, “Why? Can’t I just log on and see my investments, the reason you made them for me and how I’m allocated? Just text me. Why do we have to have a phone conversation?” Millennials are into efficiency.

They’ve grown up with the Internet. Presumably that’s reflected in their behavior, right?

Yes, but millennials’ personal lives and business lives are dramatically different. When they get up in the morning, everything is automated. At work, everything is back in the old days. The best companies are trying to move business life much closer to millennials’ personal life.

Please talk more about millennials being efficient and what that means to FAs.

Because of the internet, millennials are able to do so much on their own and get a higher level of service and knowledge than any prior generation. Advisors have to think about that when trying to connect.

Millennials have “built-in bull—- detectors,” you write. Please explain.

Because of the internet, this generation can get rapid access to anything they want when they want it. That has produced a habit to self-educate. [Ergo] millennials are forcing companies — certainly those who want to access an 80 million-member consumer marketplace — to change for the better.

“Be an advisor, not a dictator,” you say. “Millennials like to be the ones controlling decisions that impact them.” Please elaborate.

Advisors are going to move from, “Hey, just trust me!” to “Hey, let me walk you through the logic. I’d love to get your opinion.” They’re used to being in complete control because of access to information. So first you want to be a guide to inform them, and then get their opinion. They want to be involved in the conversation and understand why you’re making particular decisions.

You stress “the Content Economy.” Please define.

We live in a Content Economy today even if you don’t think of it that way because it’s so much around us. It’s: “I want to be able to go really deep and learn about you and your product.” Amazon has been the leader in this, where you can learn almost [everything] about almost any product on the planet. As an advisor, going forward you’ll need to create content around your

products so people can learn about you without having to speak with you.

Why do you strongly recommend that advisors, and others, use video to create rapport with millennials?

Video is the best way to connect with millennials. However, [creating] video is probably the number one thing that baby boomers and Gen-Xers are skittish about, whereas millennials are very comfortable shooting a video and doing a selfie. It’s very normal operating procedure. Advisors should be shooting videos with their phones, their desktops [computers] and getting them done professionally. Comprehension is dramatically higher with video vs. just reading, too.

How can FAs begin to build a relationship with clients’ millennial children?

Create content, such as podcasts, so they can learn about the value you provide. Two-thirds of advisors lose the account when a child inherits money from their parents. [To avoid that] advisors should start engaging with them by, for example, providing a place where they can see their parents’ investment portfolio — after the parents OK that, of course. Then the FA and millennial can start texting about the investments.

Will FAs need to change their compensation structure once millennials become a meaningful portion of the business?

Millennials are a cheap generation. They’re so used to getting stuff for free or at big discounts on the internet, and that’s going to impact financial advisors’ fees.

What about a human advisor’s personal touch? Will millennials want that?

There is absolutely going to be a personal touch component: Because a lot of inherited money is at stake, there will be times when they’ll want to have access to a human advisor.

For instance?

A robo-advisor is great until the market goes down 25%. Then [millennials] will want to talk to someone fast! They’ll want guidance. Once they have wealth, there’s a big risk of making a mistake, so they’ll reach out for help and enjoy having someone guide them. But they’re going to want to be involved in the decisions and understand the logic behind them.

“Millennials invest using their heart. Advisors should embrace how [they] look at the world and help them invest in solutions to meet their vision,” you say. What does that entail?

Millennials are a very socially conscious generation and want to know that the money [they invest] is going to improving the world. It could be the environment or social causes [etc.]. They want to know their investments are having an impact.

I assume that’s why you forecast millennials will be known as the Impact Generation?

They’re going to have a massive impact on everything that happens universally. They absolutely want to influence where their money is going and how it’s being invested. They’re in the pre-dominant stage now, but in the next 10 years, when they’ll be in their late 40s, they’ll be corporate CEOs — and their influence will really be felt.

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