A 3-Phased Approach to Cost-effectively Acquire Millennial Clients


Whenever I talk about serving younger investors, the issue of profitability always comes up. Now I could go on for days about the profitability of different fee models for serving the mass affluent (mass affluent millennials, in particular). Today though, I want to focus on profitability as it pertains to managing some of the upfront sales costs. Because the costs of acquiring millennials as clients can be high, mostly because closing rates can be relatively low. But there is a way you can be lucrative by developing a sales process that enables you streamline processes, filter candidates and qualify prospects.

About those non-committal millennials

Let’s be honest here, this is a bit of a numbers game. Considering that millennials are the largest generation to date, even surpassing the baby boomers, it’s inevitable that you’re going to have to kiss a lot of frogs. I’m always a huge advocate for millennials, but I’m reasonable enough to admit that there are many who just will not be a good fit as potential clients. This is the case with every generation (not just Gen Y). Some will be serious about taking action on their finances, but many will not.

Secondly, financial planning is not the norm among millennials. Very few of their friends currently have a financial advisor. When they need financial advice, they’re more likely to look it up online or call a parent/friend, not an advisor. This is not an issue specific to millennials, however. The industry has historically focused all its attention on the top tier of wealth, leaving everyone else feeling too inadequate to gain access to professional advice (and maybe even a little skeptical, too).

So if you are serious about wanting to develop a sustainable business model to serve this generation, it will be vital that you develop an effective sales process that enables you to overcome these obstacles.

But how?

When refining your sales process, it’s important you review the model you currently use with your HNW investors and look for opportunities to streamline discussions or decisions. In working with the mass affluent, you don’t have time for multiple meetings to get them to commit to becoming a client. You just can’t – the payoff just isn’t as high as with HNW prospects. You would end up unprofitable fairly quickly.

So let’s break down the sales cycle and discuss ways you can streamline things. While I’m at it, I’m going to borrow ideas from my buddy, Jim McGowan, a planner with Marshall Financial Group, who went down this road before in developing their My Wealth Coach program. Though the firm still traditionally works with HNW investors, this program was designed to better serve the needs of the emerging mass affluent.

A 3-phase approach to cost-effectively acquire millennial clients Click To Tweet

Phase 1: Source

Some of the more conventional lead generation sources you might use today – COIs, business networking, client events, newsletters – take way too much time and energy to make it worth it. Moreover, most of these approaches wouldn’t grab the attention of a millennial prospect. However, one traditional approach that should definitely not go away is referrals. They are actually more relevant than ever in this case, especially if many of your potential millennial prospects are your clients’ kids.

Your lead generation process could be as simple as profiling your clients with kids, determining if you would want to work with them, and then mentioning in your next client review that you’re now offering planning specifically tailored to clients who are their kids’ age. Obviously it’s not as easy as 1-2-3, but it is relatively convenient, in that you already have a reason to meet with these referral sources on a regular basis. In fact, Jim’s team actually originally created their My Wealth Coach Program specifically for their clients’ kids, because they were already getting so many requests from their clients to help their children.

Now there are clearly many other lead generation processes that can be streamlined through digital marketing, like blogs, search engine marketing, social media, etc. These are certainly powerful tools, especially with millennials. But start with referrals, and you can always build towards this stuff later on.

Phase 2: Qualify

Qualifying leads is so important with this demographic. It’s good to be selective, because there will likely be many millennials who show initial interest, but aren’t yet ready to commit. This might feel awkward, because many advisors aren’t used to turning away prospects. Yet, many of our most successful advisors (regardless of what demographic they serve) are the ones who have built an ideal client profile based on their niche or value proposition, and then only qualify ones who meet that profile. It creates a better outcome for both the advisor and client. The key is having the confidence to refer away prospects who are better suited for other advisors or resources.

Jim’s firm qualifies millennial prospects in a few ways. First, if the prospect was referred by a client or close personal contact to the firm, they feel that is one level of qualification in itself. Another level of qualification is done somewhat through their website. They do a very good job of laying out their My Wealth Coach services, pricing, and process in a very transparent way. This way, a prospect has an opportunity to see the level of commitment upfront and self-opt out by not taking the call to action and contacting Jim. Lastly, Jim’s team is a big proponent of all prospects completing a fact-finding questionnaire before they meet with them. This enables Jim to not only streamline his own assessment about whether they’d make a good client, but it also helps streamline the planning process later on.

Phase 3: Meet

With HNW investors, the first meeting is often all about fact-finding – but in this scenario, we’re suggesting you do that before meeting the prospect. So this first meeting should really be more of a proposal meeting, but one centered around your proposed financial plan, rather than a pure investment proposal. This is the first time I’m suggesting you break from streamlining things through technology and move to something more hands-on. Financial planning will be the real value you bring to this demographic, who is commonly struggling with big decisions around key life events. You have to demonstrate your value upfront if you want to capture these so-called “non-committal” millennials. And because I’m suggesting you give up your valuable time and expertise, my next suggestion is that you charge for that first meeting. (Gasp! What am I thinking?)

Take Jim’s model as an example. He charges $250 for that first meeting (which, by the way, also further qualifies the prospect because it deters those who aren’t willing to pay for advice). In the meeting, he spends 2 hours getting to know the client and reviewing his proposed financial plan. At the end of that meeting, Jim and the prospect mutually decide if it makes sense to continue to move forward in working together. If it works out, the client commits to an ongoing, retainer-based service model, where Jim helps them implement the plan. If it doesn’t work out, the client still leaves with some solid recommendations from the plan that they can implement themselves. Jim puts it quite nicely, “That first meeting should be as much about giving the millennial prospect an opportunity to interview you, as it is an opportunity for you to interview them.” This meeting isn’t so much a money maker for Jim, as it is a chance for him to demonstrate his value, while also recovering costs.

Don’t sell yourself short

Your time and services are too valuable to try out a new endeavor like building a line of business geared toward millennials without a plan to ensure profitability. Take this opportunity to assess your business model, like Jim did, and look for ways to simplify and streamline things before serving this demographic.

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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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