An expected shift in the demographics of advisors’ wealth management clients has been foreshadowed for some time. According to Accenture, by 2048, we will witness $30 trillion to $41 trillion passing from one generation to the next.
And this year, Forbes released its 2019 list of the world’s richest billionaires, with a record 71 individuals under the age of 40 making this year’s list. With many advisors’ target market of baby boomers aging, every advisor is looking for their next ideal set of relationships.
Advisors often ask me about client acquisition strategies, and many have inquired about creating an entirely new target market focusing on this rising group of heirs and young entrepreneurs.
Many think this is a strategic and simple move. But while the opportunity to target next generation clients may seem ripe, it’s not at all low-hanging fruit. If you decide to proceed at all, you should do so with caution and only after considering other growth strategies first.
Who is your true target client? Trying to be all things to all people is not the most effective strategy or best use of your valuable time. When you establish a niche or focus in your practice, you develop expertise that can be a competitive advantage and isn’t easily replicated.
Do you feel you really understand the younger client market well enough, and the challenges and opportunities that make it unique? How much will you need to adjust or build out new offerings and processes to attract and retain those clients?
Grow within your natural network. Most advisors have built and grown their business by connecting with their natural network, likely made up of clients who are of similar age from their social circles, who share common interests.
From your natural social engagements, you will encounter many more ideal target clients than if you were to try to gain access to people in different demographics. For example, many social engagements with your primary clients may already involve their spouses.
But according to reports, 70% of women fire their advisors within one year of the death of their spouse. How close are you to both spouses? With a natural network in common, not connecting with your client’s spouse is perhaps your biggest missed opportunity when it comes to retaining assets and ensuring continuity of service.