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In this industry we talk a great deal about the next generation of investors. More specifically, we talk about asset retention. How can we get introduced to the next generation, through our existing clients, to ensure we maintain assets across generations?
But is that the biggest challenge?
I’d suggest that the bigger challenge is whether you have built a business that is truly compelling to the next generation. It won’t matter if a younger client is introduced, as part of a multi-generational plan or whether they find you via some other means, if the experience or offer doesn’t reflect their unique needs.
We believe that to connect with any client (younger or more mature), we need to deliver an experience that not only meets their expectations and preferences, but goes deeper to really reflect their concerns, their needs and the things that keep them up at night.
If we apply that thinking to the next generation, we can reframe the challenge.
How can you build a business that supports your existing clients and is compelling to the next generation?
The Why is in the Referrals
It’s hard to argue against the idea that any healthy business needs a stream of new clients. And a business that plans to continue long into the future needs younger clients.
But there is another reason to focus on the next generation and that is referrals. Our research shows that younger clients refer more often. While they may not have the same wealth, referrals can obviously have a positive impact on the business.
Intentionally Evolving Your Experience
To help you evolve your business and ensure it’s compelling to the next generation, I wanted to share some of the latest data. We know, of course, that ‘younger people are different’. But what do those differences mean to your business and how can you embrace them to deliver meaningful value and drive growth?
Here’s what we know, drawing on Absolute Engagement’s ongoing investor research and starting with differences around service delivery and then shifting to the more interesting findings on mindset.
1. Younger clients want more contact
It would be a blinding flash of the obvious to point out that younger people communicate in different ways. But those differences will influence the most fundamental aspects of how we communicate, so are worth acknowledging.
Our research shows that younger clients want more contact and specifically more review meetings. Twenty-four percent of clients who are 65-74 years old want four or more meetings per year, jumping to 48 percent among those 35-44 years old. This may, of course, be a reasonable reflection of the changes happening in their lives.
It’s worth noting that younger clients are happier with shorter meetings, so this doesn’t necessarily mean an increase in the time you invest in relationships.
2. Younger clients prefer virtual
It won’t be surprising, of course, that about half of younger clients prefer virtual reviews (or a mix of virtual and in-person). While 47 percent of clients, who are 35-44 years old, prefer virtual meetings or a mix of in-person and virtual, that drops to 24 percent among those who are 65-75 years old.
3. Younger clients engage with content differently
When we look at the communications you share (beyond the review process) we also see differences across generations. Across generations there is an overall increase in the demand for providing clients with ‘tools’ (think assessments) and for video.
One of the biggest differences, however, flies in the face of some of the well-worn biases that many hold. When it comes to content and education, younger clients are looking for more personal connection. We found that younger clients were more likely to say they were interested in live or virtual presentations. Our more mature clients were more likely to be happy with reading articles.
4. Yes, younger clients are on social
We know, of course, that younger people are significantly more likely to use social media as both a way to connect and to find and digest content. The primary difference, beyond the fact that they're more likely to use different channels broadly, is that Instagram plays a bigger role with the younger generations.
5. They are looking for advisors online
One of the most significant impacts of the prevalence of online and social activity is that it will change our approach to new business development. Younger investors are searching for an advisor online and advisors need to be there.
The pattern in the graph below is stark. Investors under 44 are searching online, whether that’s social media, bloggers or using matching tools.
6. Younger clients need and want support
One of the more interesting data points, from an earlier study, showed that younger clients were more likely to say their confidence with their advisor was impacted by external events. At the time we were looking at media coverage of Silicon Valley Bank and Credit Suisse. They clearly need proactive outreach when such things happen.
7. Younger clients worry about different things.
While most clients share some of the same concerns, like the impact of market volatility and the rising costs of health care, that’s where the commonalities stop. Age and stage of life clearly impact the things that are on our mind. The chart below shows the top concerns for different age segments. For advisors, that suggests that while generic content is ‘nice’ there is an opportunity to segment content based on key concerns for greater impact.
It’s also interesting to see that younger clients are more likely to share their concerns on a range of issues beyond the financial.
8. Younger clients think differently about their goals for the future
Perhaps the most important thing to realize about younger clients is that they think differently about the future. Yes, they think about financial security, but they are much more likely to have goals that focus on experiences, new skills or causes that are important to them. Those goals clearly need to dictate the plan.
Not only do they think differently, younger clients are more likely to value your support in reaching goals that go beyond the financial. Support, of course, can take many forms. It may mean you help them articulate those goals, create accountability by revisiting them in your review meetings or even share resources to help them take action.
What’s Next?
There is a clear opportunity to support younger clients differently. And while we may like to think about this as a retention issue, it may be much more. Building a sustainable business means ensuring you are meeting the needs of the next generation, and the next, and the next.
Related: Defining vs. Delivering a Great Client Experience: What's the Difference?