Last week, we invited 3 millennial advisors (Daniel Zajac, Jim McGowan and Stephanie James) to speak on a panel for a joint event with the local FPA NexGen Chapter of the Philadelphia Tri-state area. These advisors come from firms who traditionally serve pre-retiree or retiree clients (not unlike your firm), but who are all now attempting to branch out and serve millennial clients, as well.
Now, what I cannot provide you with coming out of this panel – is a specific, bulletproof method for successfully serving Gen Y. We’re much too early on in this millennial journey for anyone to have cracked that code. In fact, part of the reason why I enjoyed the panel was because each advisor was trying out different approaches to marketing, fees, service model, etc. To hear them talk about what has (or has not) worked was a valuable discussion in itself.
What I can provide you with though – is a meaningful business case for why more advisory firms should consider doing as Daniel, Jim, and Stephanie have done in expanding their client base to serve younger generations. I know there are still a lot of skeptics out there, wondering why advisors (like those on this panel) are even bothering with millennials. For those of you who still need convincing, here are 3 reasons why these 3 advisors are attempting to serve millennials.
1. Building a more sustainable business with true enterprise value.
How much would you pay for an advisory business with a book of clients who are well into their retirement years and actively distributing assets? I know…it’s a sensitive topic, but the age of your clients is a contributing factor to how much your business is worth. There’s inherent risk when your book is concentrated on a client base that isn’t actively receiving new income and growing their assets. The panelists recognize that if you want to build an enduring business with true enterprise value, you need a diverse book with a healthy mix of clients of all ages and financial life stages (accumulation, stability, and distribution). Having this type of sustainable profitability will make your business more valuable to potential buyers or, alternatively, more attractive to potential sellers.
2. Making something of those accommodation accounts.
The panelists have seen it first-hand – that client with the kid whom you agreed to help out “this one time” or that not-so-ideal referral you got from your ideal “A” client. So what do you do? You’re a planner who truly values your client relationships and helping others, so you agree to take the call or meeting. Then, that one-time discussion turns into lots of questions and follow-up, and before you know it, you’re serving this person almost as much (if not more) than your normal clients.
What if you could at least break-even or profit just a little bit from these accommodation accounts? That’s one of the more strategic motivations behind serving millennials or lower-end clients – offering light planning services at a lower cost to prospects who don’t meet your minimum, or just don’t require your normal comprehensive planning services.
Maybe it’s something as simple as 1-2 meetings with the prospect, followed-up with 3-5 written recommendations on how to address their key financial issues. Again, the motivation here is not to become a profit center; rather, it’s for the long-term advantages. You develop stronger, stickier relationships with your boomer clients by helping their friends and family. You also benefit if this prospect develops more substantial wealth and complexity over the long run and eventually comes back to you, looking much more like one of your ideal clients who warrants full financial planning. If it’s your client’s kid, perhaps you develop enough trust that they decide to stay with you after inheriting their parents’ wealth. By building out a business model for serving these types of lower-end investors, you not only recover costs, but hopefully reap those longer-term benefits.
3. Attracting and retaining younger advisors to the firm.
I’ll preface this with a key consideration – not all younger advisors want to serve younger investors. I’ve met countless advisors my age who truly enjoy helping boomers and couldn’t be bothered by millennials. On the other hand, there are many younger advisors out there who truly enjoy working with their peers and feel they’re an underserved demographic who really need their help. Giving these types of advisors the flexibility and support they need to try new methods of serving younger investors can be a key retention tool and a big selling point for attracting young talent.
No millennial wants to feel like they’re working at a firm that’s outdated or unwilling to try new things to stay competitive. They are also looking for opportunities to contribute to the profitability and success of the business (perhaps with hopes of showing they could be “business-owner” material down the road). What I found the most impressive among this panel was the fact that their firms provide them with the resources they need for this business venture and try new business models for serving millennials. It’s a great way to help your advisors feel like they’re truly adding value to the firm.
Are you motivated enough?
As I said before, there’s still a lot of trial-and-error to figure out how to successfully serve millennials. But here we had 3 advisors, not unlike yourselves – and they see the business opportunity, as well as work at firms that foster an environment that enables them to try out new ways of servicing the next generation of investors. So whether it’s because of valuation, costs or retention – hopefully, one of their motivations is motivating enough for you to do the same.