A major generational wealth transfer is underway in America. Baby boomers are starting to hand over assets to their Millennial children and grandchildren, and financial advisors are wondering where they fall in the mix. This transfer of wealth can be alarming to wealth managers who wonder where they fall in the mix. Data shows that millennial investor attrition risk is four times higher than other generations. Advisors who have spent their careers building relationships with baby boomer clients now have the opportunity to cultivate relationships with Millennials. This is especially important because over the next 30 years, $30 trillion in financial and non-financial assets are expected to pass from baby boomers to their heirs, according to Accenture. For advisors who are looking to further engage with Millennials, it’s critical they understand how to approach them, and then nurture that relationship once they become clients. (For more on this topic, see: Millennials May Be Wealthiest Generation Yet: UBS).

Prioritize Human Engagement, Not Technology

J.D Power recently commissioned a study to discover which retention strategies Millennials respond to best. The results found that technology alone will not keep them engaged; rather, they expect human engagement and effective communication from advisors. Having a proactive, strategic approach to communicating with younger generations will go a long way. They want to know they’re being listened to, and are more likely to stay with an advisor if they feel they’re progressing toward their goals.

Solidify Your Relationship With These 4 Steps

  1. Communication is king: It’s important to maintain a regular cadence of touchpoints for each individual client, and keep notes using Millennials' preferred communication methods: text, e-mail or phone calls. One way to track this is by setting proactive reminders in the customer relationship management (CRM) system after each meeting to ensure you’re connecting in a way that’s most beneficial to the client, while also helping them track toward their goals. According to the same J.D. Power study, Millennials show increased satisfaction when channels such as text and video are used in the communication process. 
  2. Understand family dynamics: How can you gain a deeper understanding of the inter-family relationship dynamics? When you can identify who gets along and who might not get along, you can help detect and navigate sensitive topics. Getting to know a client on a personal level will allow you to go above and beyond to help families plan accordingly. If a Millennial child sees you genuinely care about the well-being of their parents and family members, they will likely trust your judgment, and want to work with you in the long-term.
  3. Determine the end goal: Financial advisors understand that every client is unique and has different goals, but it’s important to dig deep to assess what matters most. Maybe your client simply wants to invest and make a strong return on investment (ROI). They may want to work to pay off student loans, or build equity to afford a down payment on their first home. Their wants and needs will largely impact how advisors manage their money. Important questions to consider asking include:
  • Do they feel inclined to take care of other family members from a financial perspective?
  • If they want to invest, do they prefer investments that fit into the environmental, social and governance (ESG) criteria?
  • When would they like to retire, and what are their retirement goals?
  • Do they want to pay off student loans, or save money for a house?
  • If they receive an inheritance from their family, would they like to live on the inherited assets and donate time or money to charities, or use the assets to grow the estate?

These questions facilitate open and honest communication, make younger clients feel valued, and help you service them more effectively.

  1. Realize the apple might fall far from the tree: Whether you’re working with heirs or new Millennial clients, it’s important to remember that most children do not follow in their parents’ exact footsteps. Oftentimes, they choose different professions, political candidates, areas to live and most importantly – different things they want to spend their money on, like travel. You should advise them differently than many of your baby boomer clients because they are growing up in a different world, and there are more options available and new factors to keep in mind (i.e. new tax regulation). Don’t limit your recommendations to what you’re comfortable with. If you know a colleague who specializes in tax effectiveness or sustainable investments, reach out to them for advice about how to help you craft the best financial strategy for your millennial client. (For more on this topic, see: Money Habits of the Millennials).

Primary Responsibility of an Advisor is to Transfer Knowledge

The primary responsibility of a financial advisor is to not simply manage wealth transfer in the form of assets, but help in the transfer of knowledge and principles required to create wealth. While advisors should take advantage of new technology innovations, they must maintain regular communication and value-add touchpoints as this will go a long way in converting the younger generations into long-term clients. Approaching Millennial clients and heirs with a truly integral approach will put you in a better position to have a multi-generational relationship with your clients – especially as Millennials start to have their own children. (For more from the SS&C Learning Institute, see: 4 Ways to Attract Tech-Savvy Millennial Investors). 

This article was written by Robert Roley, Senior Vice President, Managing Director and GM, SS&C Advent. The SS&C learning institute provides online courseware on over 200 subjects of interest to financial services professionals and students. You can learn more here about the SS&C Learning Institute’s curricula for companies, universities, and individuals.

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