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By Debbie Dry
Regardless of your strategy, its essential young clients are accounted for in your proposition, here’s why… and how.
You might roll your eyes when you hear about the ‘intergenerational wealth transfer’, or the need for advisers to appeal to younger clients.
Both are topics that have received a lot of press recently and we've written about them here.
But the truth is many advisers make a perfectly good living dealing with retirees.
Yes, some advisers are now targeting a younger market. But for most, there are plenty of wealthy baby-boomers to keep everyone busy over the next few years.
If this sounds familiar, you might think time spent on younger clients/prospects is time wasted, but that’s unlikely to be the case.
Even if younger clients aren’t part of your strategy in the coming years, you’ll still have to deal with them in some way or another. Ultimately they’ll still be important for client satisfaction and client referrals, and you should always know how to accommodate them.
So where exactly will these younger clients come from? Here are three likely scenarios…
The children or grandchildren of some of your best clients.
Are you really going to refuse to help the offspring of one of your best fee paying clients if they just need a few hours of pro bono support from your team?
A business sale.
Businesses owners are selling out younger than ever and often for polenta of money. Not only do they have the cash to pay for advice, they are more likely to be interested in complex issues such as impact investing or philanthropy, and estate planning at an age where they have a lot more life to live and mistakes to make.
Corporate introductions.
Even if you don’t look after the company’s business, work colleagues talk. If you do a good job for a high flyer in a law firm the chances are others will come knocking at your door.
Advisers often make two mistakes when dealing with younger clients, especially those with little established wealth to invest.
1. Crowbar them into their current service, which doesn’t suit their needs, and is loss making for the firm.
2. Offer a sub-standard, cut-down service, which is often little more than managing a direct offer ISA.
So, how should advisers set about accommodating these younger clients when they do come into contact with them?
Here are three changes you can make to ensure success for both parties…
How to accommodate young clients
1) Think about advising families, not just individuals.
Dealing with younger, less wealthy clients can throw up a number of problems. How do you charge them? How do you market and present your services to them? Will you appeal to their demographic or do you need different advisers? Will your clients' children accept you as their adviser once they have inherited their parents wealth or will they want to choose their own adviser?
As soon as you switch to a model that caters for the family, not the individual, these issues start to disappear. The family chooses the adviser, not the parents. Almost every firm has clients who cross subsidise others. That feels a little unfair on those paying the subsidy, but they wouldn’t have a problem if they were subsidising their own family members. You don’t need to spend money marketing your services differently to different demographics, you are pitching to a whole family not just one person. It should help you round off your service and ensure that the family money stays with you down the generations.
2) Align the delivery of your service to the needs of working people with families.
If you’ve got a job and kids the last thing you need is a trip to a city centre office during the working day. You might not want to meet after hours at home either. A quick one hour video call at lunchtime to catch up on what you need or a message with relevant documents attached isn’t just convenient, it’s becoming the norm.
Expectations are high. Waiting for a six monthly paper valuation to come through the post is increasingly anachronistic for the tech savvy. We expect information to be available online and in real time, and convenience and accessibility is often more highly valued than absolute accuracy of information. These are all solutions which deliver cost savings for advice firms, but are perceived as service improvements for a certain type of client.
A platform like ours <link to info about platform>, which assimilates communication functions into one portal where your clients can receive every aspect of financial advice remotely, might make all of the difference. Aside from pleasing your younger clients, utilising technology like this will free up time, allowing you to concentrate on the work that matters to you. Whether that’s building a strategy around growth or concentrating on your most profitable clients.
3) Put more thought into services and products which resonate with younger people.
Many investment firms have not touched a mortgage or insurance policy for years. It’s understandable, if your client base is retired and wealthy their need for an Income Protection policy is limited. You might not need to recruit an adviser full time to deal with the types of product a younger client might need, but it's a good idea to have a clear referral process to a reliable and trusted third party when you do need them.
Asking people to go and do their own research if they need PMI or some general insurance isn’t helpful. If you want to be at the centre of each family’s financial world you don’t have to do everything yourself, but you do need to look like you’ve dealt with these situations before and can bring people in who you trust implicitly with the right solutions as and when required.
And finally…
Do you really want to upset the best clients on your books by not offering their children the advice they need?
Are you prepared to pass on new businesses and stellar referrals?
Whilst talk around the “intergenerational wealth transfer” is tired, advisers must ensure their service can cater for a younger clientele. Ultimately, accommodating them now puts you in great stead further down the line, and is a sure-fire way to ensure longevity and increase firm value.
Time to improve your proposition and ensure client satisfaction in 2023? Download our full guide here.