7 Moves for Winning the Next Generation of Clients

With a great generational wealth transfer beginning to unfold, financial advisors risk a shrinking client base. Heirs must decide whether to stick with the professionals who guided their parents or leave for robo-advisors or human competitors.

An aging client base puts tremendous pressure on an advisor’s growth prospects, said Christine Stokes, Nuveen’s head of client and retirement education, during a recent webcast on the client acquisition opportunity in Gen X and younger investors.

The greatest wealth transfer in history is likely to occur in the coming years, as tens of trillions of dollars in wealth will flow from older Americans to their children and other heirs, the investment management firm notes.

Contrary to the industry worry that most who inherit substantial wealth will fire their parents’ advisors, a recent Nuveen study found that 64% of heirs who were introduced to their family’s advisor early went on to work with them, Stokes noted.

The study of 500 investors also found that 80% of wealth inheritors who first met an advisor as a child or teen decided to work with the advisor, versus 54% who first met the professional as an adult or young adult. The survey also found 87% of future wealth inheritors plan to have a financial advisor when they inherit if the conditions are right.

“This opportunity is huge for those that are ready to take it,” said Stokes, who suggested several intentional actions financial professionals can take to generate higher revenue, add more clients and improve client retention.

Among other results, the survey found that wealth inheritors are hungry for financial knowledge, eager to accomplish multiple goals and to be involved in the planning process, seek fulfilling relationships with trusted partners, lean toward working with the family’s advisor and are open to working with multiple advisors.

But are advisors pursuing these opportunities?

Financial advisors with younger clients tend to grow faster, but fewer than 25% currently work with clients younger than 50, and only 30% actively seek prospects under 40, while the average client is 64, said Stokes, citing various sources.

“Most advisors are underweight younger clients,” she said. While younger people may not have the asset base to warrant attention, many of them will or do now and will become very attractive as prospective clients, she said.

Check out the gallery for seven tips for acquiring and keeping clients across generations, according to Nuveen.

(Image: Adobe Stock)