Use this uncertain time to shine brightly with young clients and prospects
Uncertain times give advisors, portfolio managers, insurance agents and planners an opportunity to shine with clients and prospects. In my last article, I explained a 5 step approach to help clients through difficult times. I used the example of Staminak, a 62-year-old client who was worried about whether he could retire at 65 because his portfolio and employment had been impacted by the economy and tariff turbulence. In this article, I want to cover how you can shine with younger clients, to grow your business during these uncertain times.
While baby boomers (born 1950-1961) — particularly men of that generation — have been the focus of many advisors, agents and dealers, the wealth transfer to the next generation can be a tremendous opportunity. That's particularly true when it comes to underserved Canadians.
These younger Canadians are underserved, and many are comfortable taking a do-it-yourself approach to their finances. But it's wrong to assume that they do not want advice from an advisor or agent. They simply want it delivered in a different manner. BMO's annual investment survey in 2022 found that Gen Z is Canada's most engaged generation for tracking financial goals.
There is an opportunity for agents and advisors to understand the differences between the boomers and their successors and change their practices to attract the women and men poised to inherit this wealth, as well as grow their own wealth.
Beyond boomers
There are seven things I consider important to grow your business beyond baby boomers.
- Treat each client as a unique individual. Of course this applies to all clients. But don't assume that what you've done to serve baby boomers will appeal to younger generations. Some clients are goal-oriented and track the growth of their assets as a reflection of their success. Others value tracking their results to a plan, so a comprehensive and clear financial plan becomes important. Some younger clients may not want 100% of an advisor's service, preferring a hybrid model where they seek advice from you but also go online and track their progress on their own. Find out how and what each client wants and whether your firm has the technological capabilities that they want and expect. If not, lobby your firm to obtain what is necessary for this next generation.
- Understand cashflow. Among younger clients, there are competing demands for their cash which can make understanding and monitoring their cashflow a challenge. If you can help them understand how they can prioritize the cash flowing in and out, that can be a valued service. Questions about saving for a house, the kids' education or retirement vs. paying down debt are common.
- Customize your method of contact. Young adults are far less comfortable with in-person and formal contact methods. Don't make assumptions though. Find out how often each client wants to meet, and how. Do they expect to receive an agenda in advance of the meeting with materials to consider? Are they comfortable communicating by email? (Remember, communicating outside your dealer's email system, or by text or chat, is not permitted.) What do they want to discuss? Some won't have answers to all these questions, so adjust as the relationship progresses and develops. Check in at the end of meetings to see if they want a change.
- Be patient about delving into personal information. Young clients are often private by nature, given modern-day concerns about privacy. Do don't rush them to share personal circumstances with you. They may be scared off and switch to automated or robo advice. It is important to educate them about why you need this information. When they are ready, ask loads of big fat questions and patiently wait for them to consider their answers.
- Educate them, gradually. Meet your clients where they are and slowly teach them what they need to understand to make more informed and better decisions. Become an important resource to them as they gain a better understanding of the complexities of a financial plan.
- Value them. Don't assume that because their account is small now, they should be serviced by a junior advisor. An ambitious person is likely shopping for an advisor for the future and will not stick with you for the long-term if their needs are not met. Play the long game with clients and serve them properly. The laws and regulations impose the same requirements on advisors and agents, regardless of account size.
- Advise without conflict. Emphasize that the advice you provide is not influenced by your remuneration. This is something young adults are wary of. As you know, making recommendations based on your interests, and not your client's, is a legal and regulatory breach. If your clients understand that you advise them with only their best interests at heart, they will refer you to others and send you a larger share of their wallet over the long term.
Let me give you a personal example. After the shockwaves of the financial crisis, there was a consolidation of the financial services industry. Most of my clients at the time were independent firms, and advisors from independent firms. Many of them were acquired by larger banks and insurance companies, which hurt my practice. I was young and very worried.
My advisor and I developed a plan that homed in on my biggest worry: living with debt. She helped me figure out how to quickly pay down my mortgage and wrap my arms around my fixed family expenses. Paying down my mortgage was not in my advisor's best interest; however, it allowed me to sleep better at night and realize that my advisor was a genuine partner.
Don't waste this uncertain time to shine brightly with young clients and prospects. Communicate consistently to determine each client's needs, listen well, alter the frequency and methods of providing your services accordingly and always act in each client's best unique interests.
Originally published by Investment Executive
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
