The Transition to Serving Multiple Generations: 3 Ways to Get There

Jan 24, 2017


Recently, I was asked to speak with a group of advisors looking for a step-in approach to move from a traditional, one-generational practice (serving primarily just Boomers) to multigenerational (serving Gen Y, Gen X, Boomers, and beyond). As I was preparing, I did something many of us on the Practically Speaking team do when we’re sharing best practices – I borrowed some of the best ideas from our advisors. Who was doing the multigenerational thing – and how were they doing it?

What I realized was that advisors are using 3 different business models to go multigenerational.

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1. Going the conventional route.

This is a firm with your typical team structure: lead advisor, para-planner and client service associate, all working together in their different roles to support your clients. The progression to multigenerational comes naturally out of the career development of the para-planner – a driven, younger individual, who maybe just got licensed and is hungry to develop some real planning experience. In supporting you and under your guidance, the para-planner gains that experience and practice. Unsurprisingly, the para-planner “inherits” your planning process, rarely deviating from the firm’s standard service model.

Over time, the para-planner gains more responsibility, until she is ready to take on clients of her own. Inevitably, your para-planner becomes a natural fit for your younger, less complex types of investors:

  • Lower-end “c” clients
  • Small accommodation accounts
  • Your clients’ adult children

And so begins a slow progression towards becoming more multigenerational. You don’t alter your marketing or service model in any meaningful way for these types of clients. More likely than not, you’ll probably just try to fit them into your normal service model and charge them a planning fee until they have more substantial assets under management.

The advantage of this approach is that it requires very little change within your firm. You merely need to look for the opportunity and enable a workplace that fosters this type of career progression. But without real change, you may still end up looking like your traditional HNW wealth manager, which could turn-off your younger clients (especially the clients’ kids, who will still only view you as their parents’ advisor).

2. Developing an “intrapreneur.”

This is a firm with a younger advisor who has more substantial planning experience and sales drive to operate relatively autonomously. This advisor is motivated like a real business owner (perhaps you even view them as your potential successor). However, despite his entrepreneurial mentality, he’s still inherently risk-adverse, a characteristic that generally keeps him from breaking out to start his own business….though it may cross his mind.

This advisor may naturally find himself working with more of your firm’s Gen X clients or your clients’ kids, as he is likely more in tune with what their financial worries are and what they’re going through at that age. The younger clients also enjoy the continuity that comes with working with a younger advisor, who can continue to work with them over the long-term.

Maybe you, as the business-owner, start to see the opportunity that presents itself by having a younger advisor at the firm who better connects with younger clients. So you give this advisor the opportunity to establish a completely new business model within the firm that is better tailored to serving this demographic. The advisor still operates within the confines of the firm and still brings in business, but the advisor now specializes in working with Gen X/Y. This advisor develops a completely separate suite of planning services, which requires a different marketing plan, fee structure, service model, etc. Very serious firms might even separately brand this new suite of planning services, so that they are specifically geared to their younger audience – and, candidly, so marketing around this more simplistic type of planning services doesn’t dilute the firm’s traditional brand directed at HNW investors.

The benefit of this approach:

  • You have a service offering specifically tailored to younger clients, so you’re in a much better spot to successfully serve and develop this target market
  • This new offering becomes an extension of your normal business model, bringing in revenue and feeding the pipeline with emerging wealth clients (who aren’t wealthy now, but could be later)
  • You’ve done something to retain a young advisor with the business-owner mindset by allowing him to test his entrepreneurial skills, building out this new business line

3. Becoming a family practice.

This advisory firm is usually already set up in a team structure, where you have both an older and younger advisor working together on every client along with a support staff of client service reps. Sometimes, the older advisor leads with the support of the younger advisor, and sometimes it’s the other way around. Regardless, there are always two sets of eyes on every case. Because of this, the firm has likely experienced a few cases where clients have referred them to their adult kids, or the kids were brought in during the estate planning process and ended up signing up as clients, too.

The team realizes the added benefits of having multiple generations of family, where they can add value by acting as an intermediary between generations, explaining the complexities of the family’s wealth. They have also seen the added benefits of developing a stronger relationship with the family and, therefore, deeper wallet share and high client retention rates. But they also realize the complexities of it all – like maintaining privacy between clients of the same family, acting as arbitrator over difficult financial topics among family members, being the one to tell your clients that it’s time they’ve brought in the children to better understand their estate plan and will.

That’s when the team realizes they could easily specialize in these types of family planning services, making this their true value proposition. It prompts their transition to building a truly multigenerational practice, where they revamp their service offering, update their marketing and refine their client processes. In this scenario, it’s an intentional business decision that requires buy-in from the entire team.

The value of this approach is that you have:

  • A truly sustainable and competitive business model
  • An enhanced value position to differentiate yourselves as a family practice
  • A model for maintaining a healthy book with a mix of clients of all ages
  • A natural model for referrals and lead generation

I will say this: This is approach requires the biggest amount of change of all three, but because of that, it also offers some of the biggest rewards to your business.

Pick your poison

What I like about these 3 different approaches is that they all require varying levels of commitment and change. So whether you’re someone who is just looking to dip your toe in the water to try out this multigenerational thing, or looking to jump right in and create some real change at your firm, hopefully there’s something here for you.

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Missy Pohlig

Missy Pohlig

Missy Pohlig is the millennial contributor for Practically Speaking and also serves as Program Manager for the Solutions Team in the SEI Advisor Network.

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